80 Is the New 65: How High Should We Boost Retirement Age?

Delay retirement ageImagine what life would be like if we tacked 15 years onto the official retirement age -- it's not a particularly far-fetched scenario.

Life expectancies soared over the past century, thanks to advances in medical technology. Today the average 55-year-old will live to 82. In the 1930s, most were lucky to make it to 60.

It's this reality that has AIG CEO Robert Benmosche declaring that in Europe, "retirement ages will have to move to 70 [or even] 80 years old," especially in light of the continent's epic debt crisis.

And it's a suggestion the United States will have to consider as well.

The Dilemma: Death or Taxes

The positive news, of course, is that we're living longer. We get to enjoy far longer lives than our ancestors, spending more years with our children, grandchildren -- even great-grandchildren.

The problem is that we're still thinking about retirement like these ancestors did.

For starters, Social Security is an antiquated system. When it was created in 1937, most citizens didn't live past 60. Social Security was set up so that you'd begin receiving benefits at 65 when -- if, really -- you had outlived the normal lifespan.

If the same formula was being used today, you wouldn't be eligible to receive Social Security until you turned 89.

Yet now the same system tries to support folks who retire in their 60s and live into their 80s or beyond. The number of eligible beneficiaries has skyrocketed, and their payouts now span decades.

It simply can't work -- unless taxes are raised or retirement is pushed further out.

Viva la Taxes!

In a bold move, France's new president recently lowered the retirement age to 60. However, France's government concedes that this decision "will cost the state billions of euros a year," paid for by "higher worker and employer contributions."

In other words, the French will pay higher taxes in exchange for shorter careers.

Europe's dilemma will be ours in the U.S. within the next decade. With the way our Social Security system is currently structured, the nation faces a looming retirement crisis that we ordinary citizens cannot resolve. Sure, there are ways you can boost your own Social Security payout. But as a whole, Social Security and the money you will receive from it is something our politicians will have to sort out for us.

In practical terms, we have to decide whether to entrust a greater share of our income to the government during our careers (hoping to get part of it back when we retire) or enjoy more of that income while we work (using the excess to spend and save for retirement on our own).

In other words: Would you prefer to retire at a later age and pay fewer taxes during your lifetime, or retire earlier and pay even more taxes than you already do?


A Perspective Shift That Can Change Everything

The retirement age issue is not going away. But that does not mean the Social Security conundrum needs to be the single driving force that defines your future, either.

It is within our ability to realistically plan for a life into our 80s, 90s, or 100s. Think of how you'd like to spend those years. Where you'd like to live. What you'd like to learn. New hobbies you'll pick up.

Psychologist Laura Carstensen, one of the nation's leading experts on aging, recently explained: "We ask 5-year-olds what they want to be when they grow up, teens which college they want to go to, and young adults when they'll get married. But we ask few questions about our lives at 70, 80, or 90."

Yet research shows that those people who do think about how they'd like to spend these later decades -- whether traveling the world, spoiling their grandkids, or learning a new skill or language -- "are more likely to save."

This means they're the ones who have the financial means to actually enjoy retirement.

This seemingly small psychological trick will not only get you to save more -- on your own terms -- but it will also get you to make smarter decisions about your health now, which should simultaneously lower your living expenses when you do retire.

Two birds, one stone. And the stone's already in your hand.

This article was written by Motley Fool analyst Adam J. Wiederman. Click here to read Adam's free report on the best ways to ensure and plan for a wealthy retirement.


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dssmalik

Guarantee me a job until I'm 80 and you can raise the retirement age.

July 19 2012 at 1:47 PM Report abuse rate up rate down Reply
Bernie

It is easy to say people cannot receive benefits until later; however; the system is set up to force older people into retirement prior to age 65, so where are all these old people to earn a living. The worst offender is the Federal government which forces many of its employees to retire as early as 50 years of age. In addition, the term social security retirement is a mockery. Socia security is an assistance only and not a full retirement as in Europe. We are all concerned about the solvency of the fund, but no one raises the issue of several trillion dollars taken from the social security funds to finance government waste in other areas. How about the failure of the government to properly handle the funds, more and more lazy people seem to qualify for disability and tax the funds. These have hardly contributed to the fund. We can go on all day on this issue, but perhaps a better solution may be to quit attacking the so called entitlement funds (although Americans have had their money deducted and paid them for many years) and to concentrate on using part of the almost trillion dollars a year used for so-called defense from countries and enemies that do not exist. We send our kids out to die for "other" peoples who hate us and nobody seems to complain about it. Sincee we are also complaining on supporting our elder generations and we are so tight, why do we continue to give foreign aid to over two hundred other countries, including China. Has anybody seen how many homeless we have ( and they are not old yet).

July 16 2012 at 4:19 PM Report abuse rate up rate down Reply
abellgirl

The socialist party, has a great understanding of the SS problem, people are living to long.
SOOO, vote for Obama and keeping his "health care sham", because the old people will be subject to
genocide the committee's (death panels) that can deny medical Care and give em a pain pill.
However, best get yourself an official Government elected and selected title, so your Mama can be exempted from the Law..............

July 15 2012 at 8:50 AM Report abuse rate up rate down Reply
abellgirl

Bleat, bleat, bleat - "RAISE THE TAXES". Bet your one that receives from the tax Dollars, not gives or not having it stolen by the Government........
How about stop the Pork, stop giving fee phones, stop providing grants to study the sex lives of oriental prostitutes, how slow ketsup flows etc. How about, if they have 2 widescreen H.D. T.V.s, 2 CARS, a swimming pool, microwave, steam washing machine AND closets full of "coach" purses, "Prada" shoes, $300 Tennis shoes and Hats by the dozen, that they do NOT NEED A GOVERNMENT CHECK............ When the Poor, drive new Cadillac's , and own every luxury known to mankind, MAYBE they are taking undue advantage of the mentally challenged, in Washington.
No one begrudges the infirmed or ill, mentally handicapped or any "legitimate" helping hand to the "poor", but the definition for "poor" keeps growing to allow what even the "working" middle class (from which the poor are provided for) can afford, thus the "poor" have advanced holdings over and above those who are DEMANDED to pay for them.
Poverty is NOT poverty, when there are 3 able bodied in the home, living off the dole............The unemployed are not considered "hungry", when they turn down jobs simply because they pay less than what they once had, or that does not allow them the same form of elevation over the poor.
Would be a great idea to have true and lawful proof of "need", by those whose Jobs are not dependent on getting more and more on the Government Dole............ Maybe if there were no brownie points for signing up more poor, we would have a more balanced idea of who is really needy........
THE MIDDLE WORKING CLASS ARE NEEDY NOW, YET MORE AND MORE ARE DEMANDED OF THEM FOR "THE NEEDY". DUH?
WE ARE KILLING THE GOOSE THAT LAID THE GOLDEN EGG, BY THE TRULY GREEDY WHO SHAM AND CON THE SYSTEM FOR "FREE STUFF", when those who provide the FREE STUFF, no longer have it. IT'S NOT FREE, we all pay the price, thus we're all being shammed, every day.

July 15 2012 at 8:40 AM Report abuse rate up rate down Reply
Scott

"For starters, Social Security is an antiquated system. When it was created in 1937, most citizens didn't live past 60. Social Security was set up so that you'd begin receiving benefits at 65 when -- if, really -- you had outlived the normal lifespan.

If the same formula was being used today, you wouldn't be eligible to receive Social Security until you turned 89.

Yet now the same system tries to support folks who retire in their 60s and live into their 80s or beyond. The number of eligible beneficiaries has skyrocketed, and their payouts now span decades."


Absolutely untrue, the author is completely misinformed on this subject. What's weird is this is something so easy to check on. I am baffled how this got posted with this lack of fact checking, although this is very typical talking points that is taken as rock solid facts by many people.

Here is the LA Times responding to Alan Simpson just a few weeks ago who was claiming the same thing:

To set the record straight once again: Life expectancy at birth was 63 in the 1930s (actually, to be precise, expectancy at birth in 1939-41 was 63.62, according to National Vital Statistics reports). It is not statistical "torture" but hornbook statistical analysis to observe that longevity at birth, which is highly sensitive to infant and youth mortality rates, is not relevant to the fiscal health of Social Security or to the program's original features. It’s life expectancy at 65 that’s the most important longevity factor for Social Security, because it defines the length of one's retirement and therefore one’s lifetime as a Social Security recipient.

In 1939-41, those who were already 65 had average life expectancy of 77.8. For all Americans, that average has risen by a little over five years in a span of seven decades. Importantly, those gains are not distributed equally; black males, for instance, have gained only about two years of life expectancy from 65 in the same period. That means that manipulating the Social Security retirement age based on overall longevity averages, as Simpson and other "reformers" advocate, will shortchange millions of Americans, for minimal fiscal gain.

http://articles.latimes.com/2012/jun/04/news/la-mo-simpson-replies-20120602

June 22 2012 at 4:49 PM Report abuse rate up rate down Reply
ha6ai

Can't HuffPuff provide any serious business news stories?

June 16 2012 at 3:57 AM Report abuse +4 rate up rate down Reply
Craig and Valisha

What the hell do politicians care? They don't pay into it, so they don't care. Both parties for the past 50 years are to blame for this.

June 15 2012 at 9:36 PM Report abuse +1 rate up rate down Reply
ha6ai

It will soon be NEVER unless Obama is voted out.

June 15 2012 at 5:51 AM Report abuse +3 rate up rate down Reply
nancyarner

Well people may live longer now but unless they are healthy it would be hard to find a job after age 65. Are employers willing to hire people over 65? Actually the Social Security benefits don't kick in until age 66.5 for my birth year. They now let you work and collect Social Security benefits, I hope , (minimum amount of money to try and live one). Old rule was is you were still working at an old age, probably for not much money, you could not even collect the small sum of money provided by Social Security. Some old people may still be alive, but their bodies and minds are not capable of keeping a well paying job. Retirement probably should be set at 65. Just because people live longer does not mean they are really that well. Some people are still well enough to work at near 100 years old as I understand some of my ancestors were capable of, died on the way to work at like 99 years old. Should not have to work that long. Give us back all that Social Security money we paid out since age 16 please.

June 14 2012 at 8:43 PM Report abuse +1 rate up rate down Reply
friendlykenn

Raise the taxes - or put the billions the Pentagon gets and the corporaton give aways and put it all into the Social Security Fund instea of staroign a new war ever five minutes. Yeah, right, dream on!

June 14 2012 at 8:35 PM Report abuse rate up rate down Reply