A year ago, we shared a pair of recent articles from authoritative news publications discussing what the “official” retirement age – as determined by Social Security eligibility – should be. Some policy-makers have recommended that “full retirement age” be set at 70, but one of our articles argued that this idea might be simply impossible for a majority of American workers. But the second article goes even farther: if 70 won’t work, why not set the threshold at 80? Read on to discover why this is such an important subject.
Raising the Retirement Age: There’s No Simple Solution
The first article appeared in late January 2019 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.” The math is pretty simple. 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, you’ll also have fewer years of retirement to fund – and by drawing a salary plus 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.” One MIT economics professor, James Poterba, told attendees at a major Brookings Institution policy forum that it’s simply unrealistic to believe that everyone who wants to keep working until 70 can do so. Poterba drew an ironic 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, but others in less secure and more rigorous lines of work simply can’t, whether they want to or not.
Issue of Raising the Retirement Age Issue is 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 even where health is not an issue, 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 one-third experienced a second job loss after surviving the first. For these men and women, working until 70 truly seems impossible.
Raising the Retirement Age: Why Not Jump All the Way to 80?
We next turned our attention to this online article from Forbes magazine also published in early 2019 and written by contributor Robert Laura. His semi-serious assertion: because of increased productive life expectancy plus the negative stereotype that Social Security eligibility brings when people reach 62, the 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.”
Laura 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 age to begin receiving full benefits – 65 – was established based on government research and medical opinion. One statistician at the time argued that those older than 65 were clearly “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 man is 65.”
Raising the Retirement Age to 80 Could Actually Reduce Ageism
“[Social Security] 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, eligibility for Social Security should start somewhere around one’s 80th birthday. So, 80 is the new 65, we guess.
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 hope you’ll 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 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. Meanwhile, whatever the policy-makers decide about raising the retirement age, we urge you: don’t wait for the government to step up. Take charge of your own future with the power of a LifePlan. Age on!