Preparing for the 'grey wave': occupational stratification and its influence on retirement expectations and planning
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Abstract
The ‘grey wave’ of Baby Boomers is rapidly entering retirement, relying on public programs such as Medicare and Social Security to support their futures. For some, retirement was expedited by workplace closures and fears about safety during the coronavirus pandemic. The financial solvency of these programs is politically contested, although the importance of private savings strategies for post-retirement financial security is undeniable. Individuals who have saved independently for retirement enjoy post-retirement incomes two to three times higher than those who rely on Social Security alone, which directly translates into better post-retirement wellbeing. To locate potential interventions encouraging private savings for retirement, prior research has investigated how occupations shape retirement expectations and planning behaviors; two key components shaping the transition to retirement. Most of this work has examined the influence of occupations through a material lens, focusing on how occupations are economically stratified. However, occupations are stratified by more than economic position; social standing and educational attainment also hierarchically organize occupations. Chapter 1 of this dissertation outlines the budding retirement crisis as the ‘grey wave’ continues and highlights the economic theories, theories of prestige distinctions, role theory, and status inconsistency theory grounding my analysis. In Chapter 2, the first article in this three-article style dissertation, I specifically investigate how occupational stratification influences retirement expectations. These expectations set the foundation for retirement planning. To evaluate how economic position, prestige, educational attainment, and social inequalities entrenched in the labor market influence retirement expectations, I use one wave (2014) of the National Longitudinal Survey of Youth – 1979 (NLSY79). I find that advantaged position within the labor market is linked to higher expectations of maintaining that position into the twilight of one’s working years. With minor exceptions discussed in Chapter 2, individuals with higher educational attainment, occupational prestige, and income expect to remain in the full-time labor market longer. Systemic labor market inequalities and expectations according to social roles also pattern my findings. I find that women, Black people, and those in poor health generally expect to exit the full-time labor market at younger ages. I discuss these findings and suggest that retirement expectations reflect – and may potentially exacerbate – long-standing labor market inequalities. Individuals experiencing significant advantage expect more years within their advantaged positions, and those experiencing systemic disadvantage expect to exit the labor market earlier, which bears significant financial penalties, placing them at additional disadvantage upon retirement.
Chapter 3 of this dissertation examines how these same features of occupational stratification – income, prestige, and educational attainment – in concert with social inequalities, influence retirement planning strategies. I find evidence that the influence of occupations on retirement preparation is not solely economic; both educational attainment and prestige shape these same outcomes. Those with higher salaries, more occupational prestige, and greater educational attainment are more likely to independently plan for retirement and engage in a higher average number of planning strategies. Notably, though, there are some exceptions within these patterns. While salary affects the general tendency towards independently planning for retirement, patterns according to economic position are largely driven by the top 20% of earners. On the other hand, occupational prestige and educational attainment widely influence general planning tendencies and significantly predict use of five distinct retirement planning strategies. I discuss these findings in Chapter 3 and suggest that continued attention solely on the economic features of occupations may conceal the complex, nuanced ways that both social and economic facets of labor market inequalities shape the preparation for retirement.
In the final article of this dissertation, Chapter 4, I assess whether occupying discrepant positions on prestige and income hierarchies (i.e., higher prestige/lower pay or higher pay/lower prestige) influences expectations or planning strategies. Chapters 2 and 3 of this dissertation find that high salary and occupational prestige are linked to delayed retirement expectations and increased retirement planning efforts. Yet, salary and occupational prestige do not always align; some high-prestige jobs experience relatively low pay, while certain low-prestige jobs enjoy greater economic security. I find that individuals experiencing status inconsistency generally do not differ in their expectations and plans from individuals in status consistent positions, with two exceptions. People in status inconsistent positions engage in a lower number of planning strategies and differ in their likelihood of attending retirement planning meetings. But, the direction of discrepancy matters. As predicted by status inconsistency theory, those with lower salaries (and higher prestige) are less likely to attend retirement meetings, though contradictory to this theory, those with higher salaries (and lower prestige) are more likely to attend those same meetings. I discuss the implications for these findings in terms of labor market inequality and its influence in shaping the transition to retirement. I suggest that status inconsistency only influences group-affiliated planning strategies, and that economically motivated rational choice may explain the positive effect of status inconsistency I observe.
My dissertation builds on prior work examining the influence of occupational stratification on retirement preparation by investigating the effects of multiple features of occupational stratification; namely: income, educational attainment, and prestige. I argue that current examinations of the relationship between occupational stratification and planning strategies facilitating the ‘grey wave’ underestimate the role of labor market inequalities on the transition towards retirement. By focusing narrowly on economic position, the positive influence of both high occupational prestige and high educational attainment are missed. I build upon prior research by investigating how retirement expectations (Chapter 2) and retirement planning (Chapter 3) are patterned by three features of occupational stratification and social inequalities. Individuals in advantaged economic, educational, or status positions plan for retirement more, and expect more time in the labor force to meet those plans. Optimistically, I find that, with a minor exception discussed in Chapter 4, status inconsistency does not result in an earlier expectation of retirement or significantly lessened planning efforts, resulting in additional disadvantage for the already-disadvantaged. Chapter 5 provides an overview of these findings grounded in their respective theoretical frameworks. I also discuss how this expanded understanding of how occupational stratification influences retirement expectations and planning strategies offer new insights into potential pathways for intervention. Such interventions can include enhancing educational opportunities (for the younger generations especially) to increasing salaries or expanding fringe benefits associated with the ‘good habits’ of higher prestige groups.
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2024