Work For Humans Podcast: "Retirement at Risk: Is Work Failing the Next Generation of Retirees?"

Guest: Matthew Rutledge (Boston College Center for Retirement Research)
Host: Dart Lindsley
Date: February 11, 2025

Overview

This episode explores the evolving landscape of retirement security in the United States, with a focus on how the responsibility—and risk—of preparing for retirement has shifted from employers and government to individuals. Host Dart Lindsley and retirement researcher Matthew Rutledge dissect the roots and impacts of retirement systems, analyze the implications of shifting benefits, and discuss what it truly means to design jobs and policies that care for people in both the present and future.

Key Discussion Points & Insights

1. Historical Context: The Evolution of Retirement in the U.S.

• The Move from No Retirement to Social Security
  • Before Social Security, retirement was rare; most worked until they could not continue.
    • “It wasn’t that long ago...that retirement wasn’t even really a thing where people pretty much just had to keep working until they no longer could.” (03:56, Matthew Rutledge)
  • The original Social Security system was limited in reach and generosity, evolving over decades to cover more people and provide better benefits.
• Social Security International Comparisons
  • The U.S. system replaces 35-40% of pre-retirement income, which is less than most peer nations:
    • “We ask people to take more of a step down than they do in other countries. And I think that's in part because we want to make sure that it's not Social Security that they're completely reliant upon…” (12:00, Rutledge)
• Persistence of Inequities
  • Early Social Security excluded many Black workers and some public roles; gaps have narrowed over time but persist.

2. Defined Benefit (Pensions) vs. Defined Contribution (401k) Plans

• Origins and Shifts
  • Employer-sponsored benefits like pensions and health insurance were ‘unintended consequences’ of WWII wage controls.
    • “It's treating us nicely and giving us flexibility and autonomy and all that. But it's certainly going to be including those benefits that were kind of an accidental legacy.” (17:31, Rutledge)
• Pensions: Strengths and Weaknesses
  • Provided security and longevity insurance—regular, predictable post-retirement income.
  • However, they were unsustainable for many companies, leading to incentive misalignments and financial crashes.
  • Unions played a key role in both pushing for and negotiating these benefits, sometimes favoring short-term member interests.
    • “Union leadership...it's going to be mostly the senior employees in the company, the people that are probably looking that much closer at retirement...So I'm sure it wasn't an accident that the people negotiating...really want this generous pension...” (26:04, Rutledge)
• The “Con” of 401k
  • The popularization of 401k shifted retirement risk from employers to individual workers.
  • “It is a little bit of a confidence game...it's not necessarily unfair for us to ask less of the employer to try to get away from a system that may be pretty inefficient right from the start.” (18:55, Rutledge)
• Drawbacks of the Shift
  • 401k/IRA systems demand more financial literacy and personal discipline, with far less risk pooling.
  • Workers now face higher odds of “job lock” and uneven access to retirement benefits.

3. The Realities of Retirement Security Today

• Satisfaction and Adaptation
  • Most retirees report satisfaction, but this may reflect adaptation and lowered expectations.
    • “People find satisfaction eventually. And it's not necessarily because things are going great, but it's because things are going well enough.” (04:49, Rutledge)
• Precarity for Some
  • Many still retire unexpectedly or on less-than-ideal terms: downsizing lifestyles (e.g., “Nomadland” living).
• The Importance—and Inadequacy—of Social Security
  • Social Security is “not enough to live on for sure” for the majority; it is a baseline, not a substitute for savings or employer plans. (27:37, Lindsley)

4. Systemic Risks and Shocks

• Economic Crises Impact
  • The Great Recession uniquely harmed older workers, who typically had been protected in downturns.
    • “In that recession...older workers, unlike any recession before, had job loss rates that were very comparable, if not...higher, than younger workers.” (43:12, Rutledge)
  • Covid-19: Not as devastating for retirees due to strong policy response and asset buoyancy (stock and housing markets), with older adults more able to retire or shift to remote work.
    • “What happened with the COVID recession, though, was that it was short...the economic effects...were less deep than I think could have otherwise been.” (48:29, Rutledge)
• Long-Term Care as "Most Broken Aspect"
  • The biggest challenge is long-term care in advanced old age—private savings are generally inadequate, so many rely on Medicaid.
    • “It would be impossible [to afford long-term care]...for all but maybe the top couple of percent of the income distribution.” (30:54, Rutledge)

5. Structural Workforce Shifts: Non-Traditional Work & Automation

• Rise of Non-Traditional Work
  • Contract, gig, and contingent work have been increasing—especially among the youngest and oldest segments.
    • “What surprised us...is that a lot of that precarious work was done by people in their 50s and 60s.” (55:10, Rutledge)
• Automation Forces
  • Automation pushes older workers out of traditional jobs, often into contract roles, reducing security but offering a lifeline to continued earning for some.
    • “Automation does seem like it is pushing more people towards non traditional work, which I don't think is better...But...it wasn’t necessarily all bad if the alternative was them leaving the workforce altogether.” (57:43, Rutledge)
  • The next wave (AI) is expected to hit knowledge workers and “programmable” roles hardest.

6. Challenges for Vulnerable Populations

• Risks of Widowhood and Social Isolation
  • Shifting demographics, higher divorce rates, and smaller families leave some seniors (notably divorced dads and single older adults) at greater risk.
• Social Security Penalties with Equality
  • Ironically, modern couples with equal incomes can see steeper income loss after a spouse’s death, due to benefit design.
    • “The greater income equality between men and women has actually made the widowhood question a little bit harder to deal with.” (41:22, Rutledge)

7. Financial Literacy & Education

• Financial Education Often Fails
  • Short-term gains from financial literacy interventions tend to fade; real progress may hinge on improving numeracy and mathematical comfort from an early age.
    • “The natural response to that is to set it up so that financial literacy is less important. That you can set up what's called choice architecture so that we are nudging people towards the right answer.” (62:42, Rutledge)
• Adaptability Is Key
  • Rutledge urges young people to focus on developing adaptability, choosing careers that can age with them and avoid automatable, routine work.

Notable Quotes & Memorable Moments

• “A job isn't a good job unless it's offering us more than just wages. It's offering health security, it's offering retirement security...I don't know that if we were to set up a system today that we would have put these benefits on employers.” – Matthew Rutledge (00:03)
• “Retirement gets more scary the longer it lasts...the elephant in the room...is long term care, and that’s...the most broken aspect of it.” – Matthew Rutledge (30:18)
• “No bigger win...than to be able to retire with a generous benefit at a relatively young age.” – Matthew Rutledge (26:14)
• “Nomadland...was really sort of a retirement story. When we talk about people’s replacement rates not being high enough...this is the consequence.” – Matthew Rutledge (28:09)
• “Financial literacy has been largely ineffective...the part that does feel very mathy can feel a little less daunting...” – Matthew Rutledge (63:08)
• “We should...try to find work that gives us fulfillment in a way that we actually want to keep working.” – Matthew Rutledge (61:36)
• “I hire my job to make sure that I keep getting reminded that what I'm good at and what brings me joy and that I think the world needs from me is that ability to impart understanding...” – Matthew Rutledge (66:08)

Important Segment Timestamps

• Intro / Framing the Problem: 00:03–02:41
• How Well Are We Doing with Retirement? 03:34–07:46
• History of Social Security & Pensions: 08:59–14:15
• Shift from Pensions to 401k: 15:51–19:58
• Vulnerabilities in Current System: 27:31–30:15
• Long-Term Care Discussion: 30:15–36:52
• Widowhood & Family Structures: 38:42–42:04
• Impact of Economic Shocks: 42:04–50:05
• Automation & Non-Traditional Work: 52:31–61:23
• What Young People Need to Know: 61:23–65:19
• Memorable Closing (What Matt Hires His Work to Do): 65:41–68:56

Actionable Insights & Recommendations

• For Companies & Policymakers:

  • Rethink the employer-centric benefit model; consider portability and public options to reduce inequality.
  • Address long-term care with broad, sustainable policy rather than piecemeal, means-tested Medicaid backstops.
  • Create systems that “nudge” individuals towards good retirement choices, reducing the penalty for lack of financial expertise.

• For Individuals:

  • Plan for a mix of Social Security, employers’ benefits, and personal savings.
  • Prioritize adaptability, numeracy, and seeking work that can age with you.
  • Be wary of job lock or relying solely on employer-based benefits—mobility and flexibility are crucial.

Learn More

• Matthew Rutledge’s research and public resources are available through the Center for Retirement Research at Boston College.
• For further reading, check out economic studies on annuities, long-term care, automation, and the future of work, as referenced throughout the episode.

Podcast Takeaway:
While the U.S. has made significant strides since the days when retirement was a rarity, deep vulnerabilities and inequities remain. Moving forward will require innovative design—in jobs, education, and public policy—to deliver security not just for the current workforce, but for generations to come.