Revisiting Retirement Trends with Chris Farrell
Author, journalist and retirement expert Chris Farrell
In this episode, Don MacPherson is joined by journalist, author and retirement expert Chris Farrell. In their conversation, Don and Chris explore the ways in which the pandemic has impacted the ability to save for retirement for people of all walks of life. They also discuss the rate of new business creation, reskilling the older generation, and the impact of Covid-19 on the overall economy.
Chris Farrell has studied retirement and the shifts in our aging workforce extensively. An author of five books including Unretirement and Purpose and a Paycheck, Chris is an expert on how we can find happiness, health and security in our later years.
Resources From This Episode
Explore Chris’ Website
Buy Unretirement
Connect with Don on LinkedIn
Follow Don on Twitter
Read the Transcript:
Don MacPherson:
Hello, this is Don MacPherson, your host of 12 Geniuses. When I first interviewed Chris Farrell for the show in 2018, we talked about how Baby Boomers have redefined retirement. In this update, Chris and I talked about the pandemic and how it is further changing the way people are approaching life after work. This episode of 12 Geniuses is sponsored by the Think2Perform Research Institute, an organization committed to advancing moral, purposeful, and emotionally intelligent leadership. Chris, welcome back to 12 Geniuses.
Chris Farrell:
Oh, well thank you for having me.
Don MacPherson:
We recorded our initial conversation on November 30th, 2018, and it seems like a lifetime ago. We talked about your latest book, Purpose and a Paycheck, and I am most interested in starting the conversation with what has happened to retirement or the idea of retirement since the COVID-19 pandemic started?
Chris Farrell:
So I think when it comes to retirement, things are still up in the air. There's still a mixed picture. But this rethinking of retirement that I was writing about, and we talked about, where purpose is really important, where working longer and the benefits of working longer, even if it's part-time income, part-time job, the real benefits to that. Starting your own business, thinking about being an entrepreneur in the second half of life, self-employment, all these trends are continuing. Where the hesitation comes in, the cross currents come in, is that, as you know, when we had the pandemic recession, so many people lost their jobs, and in a unique twist, the age group that got hit the hardest is the 65 plus. They got hit very, very hard. There's a lot of questions about why is that? Why did that happen?
It may have been that just working in the industries where they got laid off. It may be that they were too concerned about the health concerns. Didn't want to go to work, filed for social security. There could be lots of things going on there. So one of the questions that's out there is, as the economy gain strength, as the economy gains momentum, how many people who quote-unquote retired will decide, "I'm going to come back into the job market." Oftentimes part-time, flexible, that kind of a thing. So I think those trends are still in place, but there are more question marks surrounding it. So a big part of this really depends on how robust is the recovery. My own guess is that the recovery is really robust, if it's really strong and we have a couple of very good years, then more people are going to come back into job market and more people are going to feel comfortable working longer. If we go back to this more slow growth economy where it kind of expands, but nothing particularly exciting, you may see a more diverse responses to what's going on.
Don MacPherson:
You said that one of the groups to be hardest hit by job loss was the 65 plus age demographic. Were those professionals who lost their jobs, or were they a mix of professionals and line level workers and blue collar workers?
Chris Farrell:
It was a mix of workers. Not so much the professionals, because the fact of the matter is professionals can work from home. I think that's one of the biggest lessons when we're thinking about retirement and aging that comes out of this whole experience with COVID, is it really starkly revealed the gaps in our economy about the lifelong experience. That there's a large group of people who have basically over the course of their career worked for employers that had a retirement savings plan, had health insurance. And when COVID hit, they were able to work from home. And they might be able to extend their job because their employer realized that we don't have to do some onboarding, we don't have to do any training, we know we can rely on this person. So they may even have had a little bit of a benefit.
And then there are older workers who have worked for low wages throughout their career,. They've worked for employers that don't offer retirement savings, no health insurance throughout their careers. Oftentimes frontline work, face-to-face work, working in a restaurant, working in a factory, working in a distribution center, and how vulnerable they are to what's going on in the economy. So when we're thinking about looking ahead, I think there's been a general agreement that we need to really focus a lot more attention on the low wage workforce, a low wage older workforce. And just to give you one idea, 15% of the minimum wage workforce is 55 years and older. 10% is teenagers. And a lot of times when people say minimum wage, they think teenagers. Well, the 55 plus workforce is a larger group of the minimum wage workforce than teenagers.
Don MacPherson:
One of the things that we talked about in our original conversation back in 2018 was entrepreneurship and small business creation for older workers. And it seems like the pandemic has accelerated that. Could you talk about that a little bit?
Chris Farrell:
Yes, one of the real surprises out of this pandemic is that new business creation has just soared. I mean, it's just jumped. And that's very unusual, because it makes sense it would go down, right? I mean, it would start going up when you're having the recovery, but not when you're in the the midst of the turmoil. So the 55 to 64 year old age group, back in 1997, '98, they were about 14% of all new businesses. And by 2015, 2018, and that period of time, about a quarter of all new businesses were being formed by the 54 to 64 year old age group. And the Kauffman Foundation, which follows entrepreneurship, they came out in April of 2021 with their recent numbers, and it's off the charts. Every age group went up in terms of entrepreneurship, led by the 45 to 54 year old age group, and then the second was the 54 to 64 year old age group.
I think when you look at the entrepreneurship data, what that tells you is through all this murkiness more and more people are embracing being their own boss. That some of the trends accelerated, and a lot of it has to do with necessity. You're fired, you're laid off, you don't see any really good opportunity. So the advantage that people 45 years and older have is they have skills, they have knowledge, they have something to sell. And a lot of it is micro enterprise, it's self-employment, and maybe you work with a couple of people who are contract workers with you, and they're not officially employees, they're not on your staff, but you work together. And that trend, which has been growing, I think one of the things that comes out of the pandemic is that we'll continue to grow.
Don MacPherson:
And what are the longer term outcomes to the economy with this rise in entrepreneurship?
Chris Farrell:
I think it's really exciting. Now there are quite a few economists that don't particularly like the trend, and their concern, it's a legitimate concern, there's been a decline in the number of small businesses that hire employees and then add to employees as they grow. And there's been a big increase in the number of small businesses that are a solopreneur or a solopreneur and a couple other people, but it doesn't grow much beyond that. So they worry about the job growth, the dynamism. This is entrepreneurship that's feeding the family. It's not entrepreneurship that's scalable, where you have that Silicon Valley talk about is your idea scalable? Where I think it's so important is because of the culture. It's using skill, it's using knowledge, it has purpose, because most people who are doing their own business in some form or fashion, they like it. Typically you don't choose something that you really dislike. So at least purpose is easier there.
I've been doing a lot of work interviewing people who have this kinds of business, and the most striking thing is how these lessons are passed onto their children. So one of the things that makes me most optimistic about it is not so much for the current generation, but the children are growing up watching their parents being entrepreneurs, and children are watching their parents being self-employed. So there's a skill transfer, a knowledge transfer that's going on that's unacknowledged. So if you think entrepreneurship is important, it's like we're throwing more spaghetti against the wall, and therefore I think more things are going to stick.
Don MacPherson:
You don't need a ton of equipment and cash and assets to start a business in 2021. You need a laptop and a phone and ambition and some relationships, and if you can sell, to me entrepreneurship is the only way to go.
Chris Farrell:
And then the reason that particularly deals with aging is you don't have to deal with age discrimination, at least as much. I mean, you don't have to get yourself through the algorithms, right? So when it comes to experienced workers working longer, the trend that I wrote about, one of the biggest barriers, and it's real, is age discrimination. We know that it's widespread. We know that it's deep rooted. Now, it was interesting that there were signs that in 2019 with the job market as tight as it was, that there were signs that senior management was more appreciative of its older workers, but nonetheless age discrimination is there.
So I actually think one of the big reasons for people starting their own business, small business, being an entrepreneur, being self-employed, being a freelancer, gig economy worker later in life is that you don't really have to deal with it. It's just not as big a deal. And in fact, your age may even be an advantage, because people will say, "Well, they have experience. They know what they're doing. They know how to solve problems." Because that is the definition of an entrepreneur. An entrepreneur solves problems. So your age when it's your own business can be an advantage and you don't have to justify yourself.
Don MacPherson:
The pandemic certainly seemed like an accelerator in a lot of ways, and one of the things that you have pointed out to me is that the stereotype that older people, whether they're workers or not, can adopt a new technology. So would you mind commenting on that?
Chris Farrell:
Yeah, so hopefully that is dead. I mean, it's out there all the time, and you probably in casual conversations with people have had someone said, "Oh, they can't learn this new technology. You can't teach an old dog new tricks. That kind of thing." But what the pandemic made really clear is I think it told business that that prejudice was costing them dollars. The classic example is you go to all the independent living centers, senior housing, the technical term they use is congregate living, you look at all those facilities, and Zoom has just become part of the culture of these facilities. Hopefully this notion of technophobia, technological illiteracy, that's been kind of out there disappears because we've had a real world example of it makes no sense.
There's a large literature about the importance of training as you get older, and if you look at the United States, we actually do a fair amount of training and education when people are young, but then it drops off pretty quickly. And then there's almost none once you hit age 40. I mean, you go off and do it yourself, but there's very little age 40. And looking at the research, what it turns out is that what people are interpreting as an experienced worker that doesn't want to learn something, what it is is they want to know why. I've been through five management fads about what we're going to do in our new reorganization, and we're going to learn this new technology. You want me to learn number six? Okay. But why? Just give me a really good reason why? And usually if there is a good reason, they'll learn it. I mean, that's what people do.
So I do think with age, sometimes you're not quite as enthusiastic about the latest restructuring, but that doesn't mean you can't learn it. It's just that you're wondering, have you really thought this through? The one other thing that I think comes out of this is a rethinking of health in our economy. And you start looking at the the inequities that the pandemic has really exposed, and then you start looking at... And this does deal with older workers. The workforce is aging. That's locked into the demographics. I mean, it just is. So if everybody had the same level of health as the white professional office worker, it means more and more people could work longer. And it really would mean that they'll be creating more wealth and more individual and family wealth along the way.
So I think there's always been this sense that health is an expense, kind of a luxury, and I think what we're coming out of this is realizing it's at the core of our economy, as much as education. And we now accept that education is incredibly important for this economy. I think coming out of this, we're going to think about health and with an aging population, health becomes the cumulative effect of poor health really hurts the economy and the cumulative effect of good health or better health really benefits the economy, and building that into the way that we look at the economy.
Don MacPherson:
Yeah, how do we incent that, or how do we change that, because that seems like it's so difficult to do. We have individual choice in this country, and from my point of view or perspective, we have to change what's possible, the ideas of what's possible, because if people think that they're going to live to 70 and then pass away a generation before, like my grandparents thought, I know they can live to 80, 90, 100, and if you're in retirement or you're not working for 20 of those years, what's the quality going to be? Well, that's predicated on the first 80 years of how you lived, what you ate, how you exercised, how you connected with other people, all of these things are factors. And we need to help people understand or expect. It's a long life. That is the incentive to taking care of yourself and living a healthy life and making healthy choices.
Chris Farrell:
There's a wonderful Merle Haggard / Willie Nelson song that if they had just realized how long they were going to live, that they might've behaved a little bit better earlier on. It's a wonderful song. It's in an album they did together years ago. It's tongue in cheek and yet underlying that tone: seriousness.
Don MacPherson:
Chris, I always love talking with you. Great to connect with you again, and thank you once again for being a genius.
Chris Farrell:
Thanks a lot.
Don MacPherson:
Thanks for listening to 12 Geniuses. During next week's interview, we're going to check in with cybersecurity expert Max Heinemeyer. He's going to help us understand how much more threatening cyber crime has become. That episode will be released July 13th, 2021. Thanks for listening, and thank you for being a genius.
