Retirement Age: Working til 70 May Not be an “Easy Fix” for Retirement Crisis, Study Reports – so How About 80?
A pair of recent articles on authoritative news websites have provided an interesting perspective on the question of what the “official” retirement age – as determined by Social Security eligibility – ought to be. One article quotes a study showing that the common recommendation to work until age 70 might not be possible for a majority of American workers. Fine, says the other article: why don’t we make it 80? Needless to say, we here at AgingOptions were intrigued, so we offer these articles as food for thought and conversation.
Retirement Age: No Simple Solution
The first article appeared in late January on the Reuters news website. “It may seem a simple solution to the brewing U.S. retirement crisis,” the article begins: “Get people to work until 70 before retiring and 85 percent will have the money they need for retirement.” As we said above and have reported many times here on the AgingOptions blog, this is a common suggestion. Instead of joining the large number of people (about 45 percent) who claim Social Security at 62, stay on the job, build up your savings, and max out your benefits. Besides being in better financial shape when you do finally retire, the argument goes, you also have fewer years of retirement to fund – and by drawing a salary and keeping company benefits you’ll help relieve some of the growing fiscal pressure on Social Security and Medicare. Sounds like a plan.
“But,” says Reuters, “despite the math that attracts economists and lawmakers worried about funding Social Security and Medicare, it turns out that it is not so easy.” At a recent Brookings Institution forum, one MIT economics professor, James Poterba, told attendees that it’s simply unrealistic to believe that everyone who wants to keep working until 70 can do so. Poterba drew an interesting contrast between “workers in physically demanding or unpleasant jobs” and “economists in academic offices comfortably churning out studies on Social Security fixes.” Many college professors, he said, can cling to their jobs well into their 70s, while others in less protected lines of work can’t.
Retirement Age Issue Clouded by Age Bias
The cold reality is that even older workers who want to stay on the job are vulnerable. “The Urban Institute noted in a new study that about 10 percent of those over 50 had to leave their jobs because of health,” Reuters reports. But the study also found that age discrimination “is driving far more older workers away from their jobs, regardless of education, race or gender.” Once these older workers lose their jobs, finding a new one poses a severe challenge: job seekers age 50 and older tend to stay unemployed six to ten weeks longer than their younger counterparts, and when they do find a job only 10 percent are able to match their former income. About half of those suffering job loss and finding a new position saw their income slashed by over 40 percent – and adding insult to injury, one-third experienced a second job loss after surviving the first. For these men and women, working until 70 seems impossible.
Retirement Age: from 66 to 80?
With that as a preamble, we next turned our attention to this online article from Forbes magazine published just last week and written by contributor Robert Laura. His semi-serious assertion: because of increased productive life expectancy plus the stereotype that Social Security eligibility brings to people who hit their 62nd birthday, the Social Security retirement age should in fact be raised – all the way to 80.
“I know that sounds absurd,” says Laura, “but it’s not if you understand the history of Social Security, and more importantly, the social stigmas that the current age of 62 creates.” He explains that, when Social Security was enacted in 1935, “very few people were actually supposed to live long enough to receive it. At the time, average life expectancy was only 61.8 years.” The original age to begin receiving full benefits – 65 – was established based on government research and medical opinion. One statistician at the time argued that any age beyond 65 was “unproductive.” Another so-called expert asserted that “65 should be regarded as old since it is the dawn of disease and decline.” In one argument before the Supreme Court about retirement age for railroad workers, the government stated, “It is a commonplace fact that physical ability, mental alertness and cooperativeness tend to fail after a man is 65.”
“The program was designed to get old, deteriorating people out of the workplace,” says Robert Laura, “and give them a humane way to live out their last few years in a rocking chair on the porch. Not exactly the romantic picture of how retirement is perceived today, but these are the hard truths for which the program was established.” However, he argues, the problem today is that “our current system continues to portray people ages 62-65 as old and less capable.” He calls this biased view “the foundation for ageism” and labels it “one of the key reasons that it is harder to find work after age 50.” His solution is simple. Life expectancy today is about 30 percent longer than it was 80 years ago – so therefore, statistically, the new eligibility age for Social Security should start somewhere around one’s 80th birthday.
Retirement Systems “Frozen in the Past,” Says Rajiv
Whether you agree with them or not, these two articles are important in that they bring to light a retirement planning crisis that our society refuses to address. “There’s a growing realization that we are living much longer,” says Rajiv Nagaich, “but our systems – both in government and in the private sector – are still frozen in olden times. We’re trying to address the problems of the future using the tools of the past! No wonder people are confused and fearful when they think about retirement. The deck is stacked against them.” That’s the single biggest reason why we at AgingOptions urge you to accept Rajiv’s invitation to come to a free seminar and find out about LifePlanning. It’s a plan designed to bring together all the essential elements of your retirement – finance, legal, health, housing and family – so you can have a personalized retirement road map to get you to the destination you’ve hoped for. There’s a calendar of upcoming seminars here on the AgingOptions Live Events page. Come see what all the excitement is about.
Writing in Forbers, Robert Laura is realistic about his proposal to boost the Social Security eligibility age to 80. “I realize I’m not going to receive a standing ovation or get asked to run for congress with an opinion like this,” he says. Still, “if people think ageism is an issue and understand that working longer does provide certain benefits, then our government policies need to reflect social factors and not just the dollars and cents.” We would add that, instead of waiting for the government to step up, you can do it yourself with a LifePlan. Age on!
(originally reported at www.reuters.com and www.forbes.com)