Getting 'Out' While the Getting's 'Good'

It’s been fun watching “Coach K” take another team to the Sweet 16 this year—hard to believe he’s been coaching for nearly half a century. 

I had the opportunity to see Mike Krzyzewski coach in person just once—and in the not-so-friendly confines of the claustrophobic Cameron Indoor Stadium (no, I was not rooting for Duke). And while he’s had better teams—and Duke’s not on my favorites list—I, for one, won’t be disappointed if he wound up an amazing career by winning it all… again (a sentiment made easier because the teams I was pulling for are no longer in contention).

And then there was Tom Brady—who may have had the shortest retirement in NFL history. Rumors notwithstanding, apparently Aaron Rodgers is still willing to keep playing. Presumably both are at least partially motivated by the possibility of hanging up their cleats with another championship ring on their hand—to get “out” at the top of your game. 

A Pew Research Center analysis of the most recent labor force data concludes that, as of the third quarter of 2021, just over half (50.3%) of U.S. adults 55 and older said they were out of the labor force due to retirement. That compares to 48.1% in the third quarter of 2019, before the onset of the pandemic. Looking through a more traditional retirement age focus, in the third quarter of 2021 two-thirds of those 65- to 74-year-olds were retired, compared with 64.0% in the same quarter of 2019.

Indeed, there’s a widely cited datapoint that 10,000 Boomers head into retirement every single day—an eye-dropping pace that is almost certainly higher these days. The Pew report notes that the leading edge of the Baby Boomer generation reached age 62 (the age at which workers can claim Social Security) in 2008. Between then and 2019, the retired population ages 55 and older grew by about 1 million retirees per year—but in the past two years, the ranks of retirees 55 and older have grown by… 3.5 million.

This is all a bit extraordinary. Back in the aftermath of the so-called “Great Recession,” retirement rates actually declined. By the third quarter of 2010, 48% of adults ages 55 and older[i] were retired, down from 50% in the same quarter of 2007, according to Pew. Of course, accompanying that downturn was a steep decline in the value of financial assets, not to mention home prices. Not surprisingly, that combination (and the rampant uncertainty of the times) apparently served to keep workers… working.

That’s not been the case in the aftermath of the pandemic; household wealth has been rising since the onset of the pandemic (thanks in no small part to the checks from the federal government), the markets have (certainly until recently) been robust, housing prices are rising (unfortunately, so are a lot of other things). Heck, even Social Security saw a nice bump (we’ll set aside the funding/sustainability concerns for another day).

Now there are doubtless many factors underlying these trends—surely the Boomers at least have been “conditioned” to think of the attainment of a certain age as time to cease, or wind down, full-time employment. Moreover, while it may be a phase rather than a permanent shift in sentiment, there’s no denying that many, perhaps most, workers are rethinking—work. 

 But one can’t help but note that the increases in financial wealth—and here some credit is surely due to the compounded impact of workplace benefit programs—employer contributions, and the savings that have benefited from the strong markets—that have provided the cushion, if not the wherewithal—to step out of the rat race—with the comfort and backing of their workplace retirement savings. 

And who wouldn’t want to get “out”… when the getting is “good.”

- Nevin E. Adams, JD

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[i] I’m not sure why 55 was chosen as a marker. In fairness, the notion that roughly half the population 55 and older was “retired” strikes me as extraordinary, in and of itself. While some amount of that is surely involuntary, I can’t help but think that I’m doing something “wrong”… ;-} 

Mile "Markers"

It may just be because I’ve got a birthday this week, but it would be hard to miss all the “fuss” about age and retirement during the NFL playoffs, a topic that now seems sure to carry on into the Super Bowl.

This past weekend we got to see two “old” quarterbacks fight it out for the NFC title—Tom Brady (43) and Aaron Rodgers (37)—and two young quarterbacks—Josh Allen (24) and Patrick Mahomes (25) lead their teams in the AFC championship. The inevitable comparisons will surely now carry into Super Bowl 55, as Brady becomes the oldest quarterback to reach that pinnacle (he was already tied with Peyton Manning for that status) and Mahomes (already) one of the youngest. (Ben Roethlisberger, at 23, holds the distinction of being the youngest, having wrested it in 2006 from… Tom Brady.) 

Their ages notwithstanding, this past weekend it seems fair to say that Brady played with the skill and energy of a younger man (even a younger version of himself), while Mahomes demonstrated the maturity and field generalship of one much older.

One’s age is a notoriously unreliable marker for progress and maturity, and yet it often serves as a milestone for many of our significant life points. For example, there’s the age at which you begin school (when that wasn’t a stay-at-home experience), that all-important 13^th birthday when one becomes a teenager, the age at which you are permitted to drive (one that generally also “ages” your parents), the age at which you can vote… and, of course, the one after which you can expect to be “carded” without incident. Prior to those “markers,” new parents can likely recite for you the various developmental timetables at which infants are expected to crawl, walk, talk and sleep through the night (the latter a particularly valued milestone). 

The preparation for retirement also has key milestones. ERISA provides certain age (and service) parameters for participation, of course, but down the road there’s: 

• age 50, when you can “catch up” on contributions you might have missed making when you had other obligations; 
• age 59½, when you can make untaxed savings without subtracting from them that 10% penalty for “early” withdrawal;
• age 62, when many (still) decide to begin drawing Social Security; and
• age 65, which is (still) considered to be something of an official age for retirement (even though those who are now that age will find that Social Security considers your full retirement age to be age 66 and change). 

More recently, we now have 72 (not so long ago, 70½), the age at which the IRS insists that you begin drawing what it deems to be a required minimum distribution of those as-yet-untaxed retirement savings.

Milestones—those numbered markers you can find along most major highways these days—date back to the early days of the Roman Empire. They were not only designed to tell you how far, but also to confirm that you were on the right road—and to provide some sense of the distance remaining to the desired destination. They can, of course, also serve as a handy reference point on traffic issues ahead.

For those on that road to retirement—and those who help them get there—these milestones can provide a valuable reminder of the opportunity, if not the need, to reassess and (re)evaluate regularly. 

However, they should also remind us all that this is a journey—one that has not only mileposts along the way, but a destination—and one where the timing of arrival may well be dictated by factors other than age, and beyond our control.

- Nevin E. Adams, JD