There’s a lot of numbers to juggle when it comes to retirement, but age may become more of an obsolete number as many people are working past traditional retirement ages.
While mandatory retirement is illegal in most cases, it still exists in some careers such as pilots, air-traffic controllers, federal law enforcement officers, forest rangers and some state judges and partners at law firms.
“Age 65 doesn’t mean much anymore. It’s not even the age for claiming full Social Security retirement benefits anymore. It is an age that people still often retire at, often due to convention, but is gradually becoming more and more outdated as a meaningful age over time,” said Patrick Button, an Associate Professor of Economics at Tulane University, who researches age discrimination.
The discussion around retirement age comes as the U.S. faces a retirement crisis of its own. Traditional pensions have all but disappeared, making workers responsible for amassing the bulk of the funding for old age, and the health of Social Security is in question, all while Americans are living longer, meaning they need more money to finance those years.
Read: It’s about the job, not the age: Dianne Feinstein and the question of age in retiring
The full retirement age in the U.S., or the age at which you can start claiming full Social Security benefits, has crept up to 67 for people born after 1960.
“Mandatory retirement ages are usually a bad policy, since work capacity and interest in working is going to vary a lot by age and by person. With improvements in health, lifespan, and healthcare, retiring at the common age of 65 is becoming less optimal. Older people often want to work longer—because they have lots of work capacity, experience, and interest in working,” Button said.
“In other cases, they just can’t retire at 65 because it wouldn’t allow them to make ends meet in retirement,” Button said.
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The Social Security Act of 1935 set the minimum age for receiving full retirement benefits at 65. At that point in time, however, the average life expectancy for an American male was 59.9 years.
“When Social Security started, people didn’t live very long and didn’t have much quality of life left,” Joanna Lahey, professor at the Bush School of Government and Public service at Texas A&M University. Lahey is an expert on age discrimination and the relationship between age and the labor market.
Now, average life expectancy in the United States is 76.1, according to the Centers for Disease Control and Prevention. For women, it’s 79.1 and for men it’s 73.2.
French President Emmanuel Macron’s unpopular plan to raise France’s retirement age from 62 to 64, which sparked national protests, was enacted into law on Saturday. The U.K. and China could raise their retirement ages, as well, in the coming years.
The idea of raising the full retirement age in the U.S. has been floated by some politicians as a fix for the Social Security system. Social Security’s combined trust funds will become depleted in 2034, one year earlier than expected, with 80% of benefits payable at that time.
“People are living longer and have a longer healthspan,” said Joe Casey, managing partner of Retirement Wisdom in Princeton, N.J. “There’s so many individual differences and what you do for a living really plays a role.”
As far as Social Security goes, raising the full retirement age may be a fine solution for people with desk jobs. But workers in manual labor can’t physically last as long in those careers.
As a result, raising the full retirement age “disproportionately leans on the less affluent and people who work rigorous jobs. It’s very contentious and unfair to a lot of people,” Casey said.
Even the notion of mandatory retirement ages among C-suite executives is changing.
While many companies’ chief executives and board members are still subject to mandatory retirement ages of 65, several recent exceptions include Target, Caterpillar and Boeing, which changed their rules to allow CEOs to serve longer. When Bob Iger, 71, returned as CEO at Disney, his age didn’t disqualify him. And of course, Warren Buffett still helms Berkshire Hathaway at 92.
With an average tenure of 10.2 years, the average age of departing CEOs at the S&P 500 was 62.6, according to a 2022 study by executive search firm Spencer Stuart.
“People who make a lot of money and make a lot of decisions—we don’t care about these people—they’re rich and powerful. They will be OK,” Lahey said.
“There’s this idea to retire with dignity. For most of us, most people need the money more than they need the dignity,” said Lahey.
Do you have questions about retirement, Social Security, where to live or how to afford it at all? Write to HelpMeRetire@marketwatch.com and we may use your question in a future story.
