The retirement age of 65 was introduced in 1889 by German Chancellor Otto von Bismarck when life expectancy was well below that age. Though almost everything else has changed in 127 years, especially life expectancy, the standard retirement age is still 65. But that could be changing as detailed in a brief video produced by Broadridge presented by Standard.
Baby Boomers are reaching age 65 in droves with 8,000 expected every day until 2030. At the same time, more of these older workers are remaining in the workforce with 20% of people 65 or older still employed which is expected to grow. Why?
- People are healthier
- They want to stay active and engaged
- They enjoy their jobs
- Higher healthcare costs
- It strengthens their financial position
- They don’t have enough money to retire
In fact, 50% of retired people depend on 50% of their income from Social Security which averages $1341 monthly, not enough to cover basic expenses. Delaying Social Security benefits can result in as much as 8% annual increases.
With dramatic increases in life expectancy, most people just have to work longer especially with less access to pension plans. Some people are not ready to give up the social interaction they get at work.
So it makes sense that the expected retirement age should increase to 70. But is that a good thing for employers? For some jobs, employing older workers, even if they cost more, is worthwhile. And with technology, working remotely or part time is becoming easier with dramatic increases in telecommuting over the past 20 years according to a recent SHRM survey. But for other jobs, or when a person’s health is failing but they cannot afford to retire, older workers whose hands, hearts and minds are not fully engaged presents problems.
So the real issue is about freedom and flexibility – workers that have the ability to retire but delay because they enjoy working and the company still needs them is a positive for everyone. But lack of options can cripple a company whose workforce is stagnant and employee costs are not competitive.
