Early retirement: keeping the options open

RETIREMENT, once as automatic as an escalator heading toward the exit, has now become a choice. To retire or not to retire? The question may confront a worker as early as 55, and more and more the answer is coming back: Yes. Just eight years after federal legislation outlawed mandatory retirement before age 70, Americans in record numbers are retiring early, sometimes by 55 or 60. The median retirement age of private-sector workers is now 62, according to recent figures from the General Accounting Office, and over half of all new recipients of social-security retirement benefits are under 65.

But is the increasingly popular choice to take early retirement the right choice? For some early retirees, the decision is hardly a free choice, growing out of overwhelming corporate inducements to quit. Sweetened pensions and other financial incentives can leave older workers -- even those as young as 50 or 55 -- with little choice but to accept.

``Some employees are afraid that if they don't opt for the company's offer of early retirement and take a lump-sum payment, that sometime later -- six months, a year -- there may be a reduction in force, at which time they would lose out,'' says Cyril Brickfield, executive director of the American Association of Retired Persons in Washington, D.C. Although he believes that ``most companies do not act in bad faith,'' he worries about the effect on employees, particularly those whose skills have not kept pace with technological innovation and changing industrial demand.

``Where do these workers go?'' he asks. ``All too many of them simply have to work. Their pensions in too many cases aren't enough. It's hard to get a job at 55, 65, so what do you do?''

Even those not directly affected by a ``golden handshake'' can find the last years of their careers quietly altered by corporate attitudes. ``Just as age 65 has been a benchmark, so too age 54 is making its appearance on the horizon,'' says Mr. Brickfield. ``It seems when a person reaches that age, management makes a decision that this person isn't going to fit into future plans. They don't retrain them, they don't include them in advancement. These employees just serve out their time.''

Although some demographers and employers claim that declining birthrates will increase the demand for older workers in the years ahead, a report due out next month offers a different point of view. The Task Force on Employment and Aging, sponsored by the Brookdale Foundation of New York City and the Community Council of Greater New York, predicts that ``the current environment of work scarcity'' could continue into the next century. As a result ``the burden of unemployment will continue to be most heavily allocated to the poor, elderly, and disabled. Even with an improving economy,'' the report states, ``it is not at all certain that mature persons in the next 10 to 20 years will enjoy abundant opportunities for employment.''

Whichever projection proves correct, the trend toward early retirement would have profound effects on the social fabric of American life. Increased longevity coupled with shorter careers will mean several decades of leisure for many retirees. Specialists point out that everything from marriage and housing to a spouse's job and a couple's spending patterns can come up for reexamination. ``Retirement is a family affair,'' says George L. Maddox, chairman of the Council on Aging and Human Development at Duke University.

Social scientists and gerontologists, cautioning against unrealistic expectations, emphasize the need for careful planning.

Of prime importance, they note, are economic considerations. ``Over time you can't help moving into less purchasing power,'' says Harold L. Sheppard, director of the International Exchange Center on Gerontology at the University of South Florida in Tampa. ``The earlier you retire, the greater chance your income sources won't keep up with income needs.''

Although there are 500,000 private pension plans in the United States, according to Mr. Brickfield, ``90 percent of them pay very little in the way of monthly benefits.'' About half of all workers have no pension at all.

Then there are the social questions -- how to use all that time. ``The whole subject of retirement has been so oversold,'' says Gerald J. Buchert, director of the Office on Aging in St. Petersburg, Fla. ``Unless people go into second careers, or unless they've planned what they're going to do, it's boring. I'm not a workaholic, but I think people need something productive to do.''

Dr. Maddox echoes that theme. ``We've got to rethink how we're going to use a lot of years. Anybody who comes to age 55 thinking `I'm getting out' had better ask the question, `What am I going to do with the next 25 or 35 years of my life?'

``We can delude ourselves into saying `early retirement' without realizing how long we're talking about,'' he continues. ``Some thought ought to be given to the implications of this. Not just personal thought -- our society needs to do some rethinking about creating new options and teaching people. You find people busily, desperately looking for something to do that's significant.''

Above all, he believes, people must cultivate inner resources. ``It's dangerous to go into late life without keeping intellectually involved, because it means being out of touch with options and information,'' he says. ``A changing environment requires competence and new skills. Keeping people intellectually involved changes everything.''

Beyond individual considerations, there are larger societal issues.

``If people are put out at 50, 54, whatever, what happens to social security, the trust funds, the contributions that are supposed to be pouring in?'' Mr. Brickfield asks. ``Normally these people would be paying into funds, paying taxes, and not drawing. They no longer are contributors.''

Dr. Maddox sees other potentially negative ramifications.

``This country has sold itself, I think, a bad bill of goods,'' he says. ``We have people capable of staying in the work force who have chosen to get out. Our public policy is encouraging people to think of aging as associated with decrepitude. The contrary evidence is startling. What we're seeing is more and more people living vigorously, certainly through their 60s, well into their 70s. But public policy is out of kilter with reality.

``All our national and company policies continue to be pro early retirement. You get very few benefits in social security by waiting to begin drawing it. If we compare the incentives we offer in this country with those in any western European country, we have a different balance. There are stiffer penalties in other countries for taking the equivalent of social security early, and there are more benefits for waiting.''

Still, for many retired persons, this new status offers opportunities unavailable during their earlier careers.

``I have seen people who seemed to be sorry they made the move,'' Dr. Maddox says. ``But others seemed to be deliriously happy to be off and doing something they wanted to do for themselves, and some were happy to be personal entrepreneurs and consultants. Some people can't imagine living without work, but they can imagine a different kind of work, or a different balance of work and play.''

To achieve this new balance, gerontologists maintain, requires a more creative approach to late-life employment.

``Sweden has had an excellent program for tapered retirement -- what they call a partial pension scheme,'' Dr. Sheppard says. ``Staying in the work force doesn't mean being stuck with the same job for 50 years. To what extent do people need to be retrained for part-time skills? And how much are unions willing to accept part-time work?

``For a lot of people who hate their work, retirement is a way of getting away from a dissatisfying job,'' he concludes. ``But if people are satisfied with their job, get pleasure out of it, and are healthy, my philosophy is, Why retire?''

Mr. Brickfield connects the choices of retirement to the rest of a worker's life this way: ``All generations should have an opportunity to work. The test should be not age, but the ability to perform satisfactorily.''