Illusionist? No — The Real Illusion Is Working Longer

Harry’s work-until-he-is-70 plan has a name. My colleagues Anthony Webb, Michael Papadopoulos and I called it an illusion. In paper The Illusory Benefits of Working Longer on Financial Preparedness for Retirement, we found that older workers with insufficient savings are routinely advised to delay retirement — but that this advice collides with the reality of what the labor market actually offers aging workers.

Harry knows this without reading research. He is relieved he is working at a plant in Elkhart, Indiana, which was once a 100-year-old family business and was bought by a new investor who has nearly bankrupted it in two years. He was told this week layoffs would begin. Eight hours later he emailed me that he may survive this round of layoffs — "I do have some seniority" — but that his youngest daughter was just laid off.

He says the company’s survival now depends on whether its largest customer pays what it owes. This fear of accounts receivables going cold is a classic sign of a recession. Harry got me worried!

Harry’s plan to work until 70 assumes a job will exist. Even if people have the health and strength to keep working past traditional retirement ages, they have no guarantee they will be able to find a job. Our retirement system abandons older people in an unfriendly labor market at the moment they are most vulnerable to age discrimination.

Losing ACA Subsidies Didn’t Just Raise Costs, It Erased His Middle-Class Status

Harry’s finances have been gutted by a policy decision — not his own decision. His union and employer agreed that instead of providing health insurance, the employer would give a $1,000-a-month stipend for workers to buy their own. Before the enhanced ACA subsidies expired, Harry was able to get a family plan for $550 a month, leaving $450 left over. With the loss of the Obamacare subsidies, the same plan costs $1,500 a month. He pays $387.50 a week — nearly $20,000 a year — for family health insurance.

"Just returning the old ACA subsidies," he wrote, "would put me back into the middle class, instead of the working poor again. With affordable healthcare I am not living paycheck to paycheck and have money to invest in my future."

To cope, he cut deep. He gave up his bowling league — he is a serious competitive bowler who once maintained a 200-plus average for two decades — and now only subs to keep costs down. He canceled streaming services, the car wash membership, everything discretionary.

Without a Pension, His Wife Faces Even More Risk

His wife, 1o years his junior, is waiting on a Social Security disability decision. She has hand tremors and a damaged disc in her neck from two car accidents; her doctors agree she will not be able to work again. She will likely outlive Harry by a substantial margin. This matters enormously for their retirement arithmetic.

In the most optimistic scenario — Harry works until 70, both live to around 82 — their combined Social Security income would be roughly $3,500 a month. After Harry dies, his wife would receive a survivor benefit of about $2,400 a month. That keeps her technically above the poverty line. It leaves no room for emergencies, dental bills or the long-term care that women disproportionately need and rarely can afford.

Harry thinks about his mother, who lived on Social Security alone and managed. But his mother did not have a spouse 10 years younger who might need support for another two decades. "My mother was able to live on her social security only," he wrote, "and my payment is scheduled to be higher." He is doing the math as best he can. The math is not kind.

Lessons for Retirement Policy And For Worker Dignity

What makes Harry’s story worth telling is precisely that he is a careful, articulate, self-aware, hardworking and loyal family member. He is not unusual.

He is a lifelong worker, a union member, a careful budgeter who paid off his car loan, ran ahead on his mortgage during good years and chose a 30-year note specifically because "if something bad happened the cheaper payment would be easier to make." He anticipated adversity. He planned for it. But he was still wiped out — by medical costs, by stagnant wages during his family-raising years, by a health insurance market that swallowed his savings.

Harry is the human proof that workplace retirement savings should be automatic, persistent and not subject to leakage.

Harry is also human proof that dignity requires that discipline, hard work, a little fun (with bowling) and loyalty pay off. That worker dignity requires getting a break — being able to retire and control the pace and content of your time. Though Harry has savings discipline and financial literacy, the economy delivered precarity across a working life of four-plus decades and plenty of stress at 62. His stress and precarious financial future represent a system failure. And until we treat the retirement crisis as a system failure, there will be millions more Harrys — working until the job disappears, hoping Social Security holds and watching their children start the same cycle from behind.