Why the 'Right' Retirement Age Doesn’t Actually Exist

In the midst of the Great Depression, the passage of the Social Security Act established a national retirement age of 65 as the standard, guaranteeing that older workers could retire and receive crucial benefits for the first time in U.S. history.

The average life expectancy in 1935, however, was just 58 for men and 62 for women. Only a little more than half of the nation’s men were expected to live to see 65, according to a document from the Social Security Administration’s archives.

The age of 65 was chosen not because it was the optimal time for people to stop working, but because, as labor economist Teresa Ghilarducci puts it, it was “cheap.”

“There was a lot of opposition to a national retirement plan. Setting the age at 65, when life expectancy was a lot lower than it is today, was a political decision to get the Social Security legislation through,” she says.

Push to raise the Social Security retirement age

The average life expectancy has grown significantly in the years since the landmark social reform was created, and so has the program. Over 50 million retirees and their dependents receive benefits as of 2023, and they tend to collect them for much longer than the founders of Social Security anticipated — often for decades.

Due in large part to this swelling population of older people, the trust fund that pays for Social Security was barreling toward insolvency in 1983. That's when Congress voted to incrementally raise the full retirement age to 67 over 33 years for workers born after 1959.

Now, with record numbers of Americans expected to turn 65 over the next few years, Social Security is approaching another funding crisis. If lawmakers do not pass new reforms in the next decade, economists estimate there will be a universal 23% Social Security benefits cut.

One option is to raise the retirement age again, a position touted mostly by the political right. On the campaign trail, former Republican presidential candidate Nikki Haley advocated for changing the retirement age for people currently in their 20s to “match life expectancy.” And in a March budget proposal, a group of House Republicans argued that “modest adjustments” to the retirement age are necessary to account for Americans’ increased longevity.

The private sector has chimed in recently as well. In an annual letter to shareholders, Blackrock CEO Larry Fink said that “no one should have to work longer than they want to,” but in the same breath called the idea of sexagenarian retirement “a bit crazy.”

According to this logic, bumping up the retirement age may seem like a no-brainer. If people are living longer, healthier lives, then shouldn't it make sense that they work longer, too? Economists and experts in aging largely say no, warning that the move would not only amount to a reduction in benefits at every age, but potentially harm the health of most older Americans.

Live longer, work longer

Lately, research and subsequent news articles trumpeting the alleged advantages of delaying retirement seem to be popping up all over the place.

In a December study, Pew Research Center found that the number of working 65-plus-year-old Americans nearly doubled from 1987 to 2023 — and that they reported higher levels of job satisfaction compared to younger workers. The headline of a recent Fortune story citing the Pew data proclaims, “The new retirement is no retirement: Baby boomers are keeping jobs well into their sixties and seventies because they ‘like going to work.’”

(You can find similar reporting from Money, like this September article based on a T. Rowe Price study that found 20% of retirees are “unretired,” or have returned to work either full- or part-time. Almost half of those retirees said they went back to work for “the social and emotional benefits.")

“There is lots of research that shows that people who are working in old age are healthier than people who are retired in old age,” Ghilarducci says. “And in surveys of people who have chosen to keep on working, they have usually chosen it because they have a good match to their job.”

The retirement-age adults who do benefit from working tend to be in positions of greater privilege and have higher-paid, "knowledge-based" occupations. This group of workers tends to have more control over the pace and requirements of their jobs, but they’re far from the majority.

A closer look reveals another, less flattering story about working into old age. While there certainly are older adults who want to work, most who are working past the traditional retirement age have to out of financial need, and the latter don't necessarily benefit from doing so.

Ghilarducci says her research shows that for most people, especially those in physically demanding and low-paid positions, working into their golden years typically causes them physical, mental and emotional harm.

“This skewed idea that working longer makes [older adults] healthier is not relevant or true for 90% of the population,” Ghilarducci adds. For “almost everybody — the secretary, the health care worker, the retail clerk — research is finding retirement with enough income is better for their health.”

There are racial, ethnic and gender implications when it comes to retirement age, too. Christina Matz, director of Boston College’s Center on Aging and Work, says that certain groups (like Hispanic, Black and women workers) have shortened working life expectancy due to their disproportionate representation in “poor quality” work.

The reality of raising the retirement age

Delaying retirement isn’t possible for many older people, even if they have a financial need to continue working. A recent survey from insurance company MassMutual found a nearly half of retirees left the workforce earlier than planned, with a third of that group reporting that they were forced to because of changes at work.

A quarter said they had to leave their job early because of an illness or injury. Matz says that caretaking responsibilities, such as in the case of a spouse developing dementia, are another major contributor to early retirement.

These early retirees often have no choice but to claim benefits before the full retirement age, resulting in lower payments for "people who need benefits the most," according to Ghilarducci. Based on her findings, raising the age for Social Security benefits further exacerbates socioeconomic inequities in retirement, accelerating death and negative health consequences for people who are less well off financially.

Matz is in agreement.

“The literature is really becoming very clear: Working longer is not an option for a good portion of the workforce,” she says.

What’s the best age to retire?

What would the ideal retirement age be if wellbeing was top policy priority, rather than political and monetary interests? Matz argues that retirement policy shouldn’t be based on chronological age at all, but a variety of factors that account for the diversity of workers’ experiences and abilities.

“It's really hard to make any kind of a blanket policy with these types of questions,’ she says.

Ghilarducci proposes a "Gray New Deal" to overhaul the retirement system, which she outlines in her latest book, Work, Retire, Repeat: The Uncertainty of Retirement in the New Economy. Every occupation, she says, would ideally have its own retirement age depending on the physical and mental requirements.

What's more, all workers would have guaranteed lifetime retirement income through a universal pension system — much like police officers and many other unionized workers enjoy today — and more Social Security benefits.

If older people want to keep working, regardless of the reason, Ghilarducci adds that health-focused policies would help them stay productive — and no one would feel forced to work late in life. Every adult would have access to jobs that they're suited for and employment training through public programs. Notably, workers would be protected by built-in anti-age discrimination laws and have more say in when, and how, they retire.

“A sign of a good society is that the definition of a working age adult changes,” she says.

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Early Retirement Savers Are Burning Out. ‘Coast FIRE’ Might Be the Answer

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