Venerable financial expert Burt Malkiel continues his professional journey at 92, offering insights on the uneven nature of careers and why retirement may be best postponed.
In a recent interview, renowned economist and Wall Street veteran Burt Malkiel has expressed concerns about the potential negative effects of early retirement on the US economy and social security system. Malkiel, who is currently the chief investment officer at Wealthfront, believes that retiring too early on a broad scale could exacerbate fiscal problems for public retirement programs and create economic strain.
Malkiel advises workers to consider working longer, as it not only contributes to a sense of purpose and staying interested and engaged, but also helps sustain the financial security of the social security system. He suggests that the government should gradually raise the retirement age to prevent the system from going bankrupt.
The economist's perspective is that early retirements reduce the labor force participation rate, which can lower economic productivity, reduce tax revenues, and place a heavier financial burden on the working population. Socially, early retirements may affect individuals' well-being by reducing engagement and income longevity, potentially impacting their quality of life and financial preparedness.
Malkiel's concerns about early retirements are not new. Throughout his diverse career, which includes stints as an economics professor at Princeton University, an investment banker, a U.S. Army lieutenant, and an economic advisor to U.S. President Gerald Ford, he has consistently advocated for older Americans in non-physically demanding jobs to stay in the workforce longer.
Despite his concerns about early retirements, Malkiel remains optimistic about the US's ability to overcome its challenges in the long run. He is the author of the book "A Random Walk Down Wall Street", which is regularly updated, and he continues to spend a lot of time working every day at the age of 92.
Malkiel is also vocal about other economic issues. He believes that promoting earlier retirements wastes an enormous amount of talent, and he is concerned about Donald Trump's behavior as US President. He also thinks that a tougher immigration policy could exacerbate the challenges of an aging population, and tariffs, according to him, would hurt both the US and its trading partners.
Despite his busy schedule, Malkiel took a break from his career to get a Ph.D. in economics at Princeton University. He eventually decided not to return to the banking world after being invited to teach at Princeton and become director at insurance and financial services company Prudential Financial. Malkiel is also an advocate of passive investing through index funds.
In summary, Malkiel's warnings about early retirements highlight the potential long-term economic impact, including increased fiscal pressure on Social Security and pension funds requiring policy responses like raising the retirement age gradually, and the social impact, which includes potential challenges in sustaining individual financial security and societal economic productivity.
- What about the impact of early retirements on personal-finance, given Malkiel's concerns about their effect on the economy and Social Security system?
- Considering Malkiel's diverse career in economics, finance, and business, what insights does he offer about investing in a broad sense, particularly concerning the role of passive investing through index funds?
- With Malkiel's continuing optimism about the U.S.'s future and given his focus on career choices, how might his advice regarding careers steer individuals away from early retirement to help maintain societal economic productivity?
