Social Security and the Age of Retirement


The first half of the twentieth century saw extraordinary gains in the life expectancy at birth (for men, nearly 22 years; for women, nearly 21 years).  But such improvements did not translate directly into longer retirements.  Life expectancy at age 65 for men increased less than five years over this time; for women, about half that amount.  Thus, life expectancy at birth is not an accurate indicator of how workers’ retirements have been extended over time.  A better indicator is the expected length of retirement for 20-year-olds. . . .  While life expectancy at birth rose 22 years for men, a young adult in 1969 could expect a retirement only 5.5 years longer (13.8 years) than a 20-year-old in 1919 (8.3 years).  In part, this is due to the increase in the retirement age from 65 to 66. . . .  [W]omen born in 1960 could, at age 20, expect a retirement of 17.1 years — one month longer than the expected retirement of women born in 1937 despite more than two extra years of life expectancy.  At first blush, one might think that increasing retirement lengths should require an increase in the normal retirement age.  However, increases in life expectancy lengthened the average number of working years as well as years of retirement — even when holding the retirement age at 65. . . .  The average number of years a 20-year-old man could expect to work by age 65 rose from 39.0 to 42.0 between those born in 1899 and those born in 1949.  Raising the retirement age to 66 added another ten months to the average working life.  Those born in 1999 will average 45.0 years of work before retirement age.  Even under current law, the younger generations will work considerably longer than generations of workers past.  For many, these additional years of work needed to reach normal retirement age will be a considerable burden.  While an investment banker, economist or senator may find it a small thing to delay retirement two more years, the same cannot be said for coal miners, auto workers, and janitors.  Life expectancy may increase, but that doesn’t mean a firefighter ought to keep working at age 66 or 68 or beyond. . . .  Productivity has and — by all projections — will increase with each generation.  Each succeeding generation will be wealthier and more productive than the previous.  For example, the Congressional Budget Office projects that the cost of Social Security will rise from 4.8 percent of GDP in 2010 to 6.2 percent in 2083 — an increase of about 1.5 percentage points.  On the other hand, over those same 73 years, CBO projects that real GDP will increase 2.3 percent per year — a combined 426 percent. . . .  Since the introduction of Social Security, life expectancy has grown, but much of the gains have taken the form of increased time spent working.  For women in particular, the increase in working years means that they will see a length of retirement virtually the same as their parents.  For those who labor in more physically demanding areas of the economy, working to an even later age is not a serious option.

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David Rosnick is an economist at the Center for Economic and Policy Research in Washington, DC.  This article was first published in the CEPR blog on 2 June 2010 under a Creative Commons license.  N.B.: “Employment for those over age 55 is up by 760,000 year over year, while it is down by 1,778,000 for everyone else” (Dean Baker, 5 June 2010).  That is the trend that the working class must fight against: they say, “Work Till You Drop!”; we say, “Shorter Work Hours, More Paid Holidays, Earlier Retirement!”

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