Traditional defined benefit pension plans, as they exist now, will disappear.
Defined contribution retirement plans will be ubiquitous.
And that four-letter word — work — will become a key element of the retirement plan of the future.
Those are the predictions of about a dozen of the nation's leading experts on pension and retirement issues.
Thirty years from now, money from continued employment will supplement benefits older Americans receive from employer-sponsored retirement plans, individual savings and Social Security, they say.
As the 76 million Americans constituting the vast baby boom generation born turn 65 and prepare for retirement, many will discover what experts have long feared: They simply will not have enough money saved, either through employer-sponsored plans or on their own, to quit working completely.
This inadequacy of retirement savings, combined with rising longevity and the anticipated declining role of Social Security, will force people to work well beyond the traditional retirement age of 65, experts say.
By 2050, the average American is expected to live to be at least 81.3 years, up from 76.6 years in 2000.
And by 2030, Social Security will replace only 36.5% of the income for a "medium earner," and a mere 24% for a "maximum earner." One reason is because the normal retirement age for Social Security is scheduled to rise from 65 to 67 for those born in 1960 and later, as well as because of rising Medicare premiums (deducted from Social Security benefits) and higher taxation of Social Security benefits.
Additionally, proposals to prop up the Social Security system might result in direct benefit cuts, as well as indirect ones through another increase in the retirement age to 70 or higher, says Alicia H. Munnell, an economist and director of the Center for Retirement Research at Boston College, Boston, who has written extensively on the subject.
"Work is going to become the fourth leg of the (retirement) stool," predicts Heidi Rackley, an actuary with Mercer Human Resource Consulting in Seattle. "We are going to have a lot of older people in the work force because they are not going to be able to retire, and they will have to supplement their pensions by working."