My dad is a GM retiree.
Where do your thoughts jump when you read that statement?
I was in a coffee shop recently where two men were talking about legacy costs…paid out to people like my dad. These were both younger workers, and the opinion seemed to be that people like my dad are an unnecessary tax on the system.
One guy said, “Those people should have saved more money. If they’d saved, they wouldn’t need that pension.”
I know that immediately many people who read this will think my dad is part of the reason GM went bankrupt. He receives a generous pension, has health care coverage and lives comfortably. He’s relatively young still and I hope he lives for a long time. That means that his benefits will continue to weigh on the company.
No Savings? Why Not?
My uncle also is a GM retiree. Around the year 2001, as the stock market experienced day after day of unnerving free fall, I happened to be standing next to him at a funeral.
Uncle: The stock market sure is all over the place. Your job can’t be easy right now.
Me: No, it’s not. Lots of people with 401k plans out there taking a beating and looking for advice.
Uncle: 401k plans?
Me: Yeah, like the one you have at GM.
Uncle: You know, I’m glad I never bothered with that. Look at all the money those people lost. I’ll stick with the pension.
At first, I thought poorly of my uncle. But for him and many others working in industry, a 401k plan was always considered “icing on the cake.” He also receives a generous pension and has health care coverage. Why should he risk hard won dollars in investments that could tank?
Because he didn’t invest online, mainly to practice internet safety for seniors, he’ll now be a burden on the system for years to come. However, the course he chose was a viable option at the time.
Reworking the Implicit Deal
This article at Timeless Finance recommends (among other things) that older Canadians should be forced into retirement by age 60. According to the author, this will energize the workforce and help young people get jobs….all at the expense of older workers.
Would this really work as intended? Will it help?
Before we tackle that argument, let’s evaluate the historical situation: it was a different game for my dad than it is for many of you and I. He worked in an era of “work for a large company to care for your family for 30 years, and then the company will take care of you.”
It was an implicit deal.
Now the deal has changed, and there’s a push to change it further. I’m sure many older workers wish the deal had been explicit.
You have to be a moron to not understand the shaky economics of our world financial situation.
- There’s more fallout to come from the housing crisis.
- The student loan bubble is about to pop.
- European states are ready to topple like dominos.
But do we have to immediately jump to changing the deal for people who played the game “correctly” only to find the rules changed later?
Will Eliminating Older Workers Help?
I only told you half of the story about my dad and uncle. The other half is that both my uncle and dad are gainfully employed at the moment. They both play by the rules (their income is low enough that it doesn’t affect their guaranteed income stream from Social Security or their pension plans).
It isn’t just good for my relatives; it seems it’s good for business. According to this Entrepreneur magazine article, companies that hire older workers reap benefits as wide-ranging as:
- Higher quality work
- Listening skills
- Organizational skils
According to the Timeless Finance author, both my dad’s and uncle’s part time jobs should be handed to younger workers.
But I’ve seen my uncle and dad work at their jobs. Young coworkers ask their opinion frequently. In fact, the owner of the golf course where my dad works often consults him about overall operations. Customers gravitate toward them, thinking these men know what they’re doing. Both of these men possess tons of insight and knowledge help their employers succeed.
My opinion: If I still had my boner of the week segments, this Timeless Finance article would have been on it. While some of the suggestions make sense to me, and we clearly need change, I believe that we should look elsewhere for money rather than eliminate experience for youth. I also think it’s a mistake to penalize people who played by the rules as they knew them until we’ve looked under other stones.
Okay, everyone….your thoughts? Do we treat seniors fairly? Should we have a mandatory retirement age?
(photo credit: Hubert Elliot in the Rowan County Maintenance Yard Office: NCDOT Communications, Flickr)