The retirement age debate in the US is one that has persisted over a number of decades. The debate revolves around the age at which people are no longer expected to work, and when they can claim their Social Security retirement benefits. There are ongoing arguments around raising the retirement age, lowering the retirement age,  or abolishing the retirement age altogether.

The full retirement age in this country historically was 65, with early partial benefit disbursements available at age 62. In 1983, Congress passed legislation increasing the full retirement age to between 66 and 67 depending on when the person was born. Debate around further increasing the full retirement age is on-going, with the government defending this on the basis that the US has an aging population and, with improvements in medical science, people are simply living longer.

In short, they argue that they’re trying to make the Social Security system more sustainable in the long term.

This has been a hot topic for quite some time, but particularly in recent years, with politicians from both sides of the political aisle, and the general public, arguing the pros and cons of raising or lowering the full retirement age.

Those in favor of raising the retirement age point out that:

  • people are living longer, healthier lives, so they can work for longer;
  • working longer and until a later age gives people longer to save for retirement;
  • hiring older people will lead to more diversity in the workforce;
  • it’s the only way to ensure the Social Security system can keep going;

However, those against raising the retirement age say that:

  • it will put undue pressure on peoples’ health, both physical and mental;
  • it will make life much harder for those who do physically demanding jobs, such as work involving manual labor;
  • it will lead to an increase in unemployment among older people (leading to a separate debate on ageism in the workplace);
  • it adversely affects certain groups who have a lower life expectancy than others;

The Biden Administration has said that it is committed to protecting Social Security benefits, while many in Congress are taking a serious look at making cuts in the form of increasing the full retirement age, in order to make the program more fiscally sustainable. Other leading candidates in the upcoming 2024 presidential election are making their varied positions known on the topic as well.

Whatever the case, the retirement age debate is set to rumble on.

 

If you raise the retirement age, are you unfairly penalizing some people?

If you lower the retirement age, is the current Social Security system sustainable?

If you abolish the retirement age entirely, when will people choose to retire?

 

This blog post aims to expand on this often complex debate and break it down, covering the history of retirement age in this country, the Social Security system, how to claim your retirement benefits, how much you’ll receive, the impact of lowering or raising the retirement age on the workforce and certain industries, and the effects on individuals and society as a whole if the retirement age changes.

 

Historical Background of Retirement Age

Businessman holding black alarm clock with clockwise countdown from work to retirement.

The concept and history of the retirement age in the US

Although the retirement age debate seems to have been going on forever, the concept of a retirement age is relatively new in terms of human history.

Right up until the 20th Century, people simply worked until they died or were unable to work any more – hard to believe, but true!

But as living standards improved towards the latter end of that century and, as a result, life expectancy increased, the notion of a specified retirement age gained momentum. Throughout the early 1930s, State retirement programs started appearing, and in 1935, President Roosevelt signed into law the Social Security Act, the first federal assistance program for the elderly.

Social Security at its inception in 1935 only covered retired workers, who became eligible at age 65. During the decades that followed, various changes were made to include spouses, children of deceased recipients, and the disabled. As the number of recipients grew along with their longevity of life, so too did the financial burden on the system. In the 1970s, when financial problems became imminent, lawmakers were forced to increase tax rates that funded Social Security, as well as slightly reduced the amount of benefits which were available. This temporarily stabilized the financial situation, until the economic slowdown of the 1980s created the need for further modifications. In 1983, Congress passed a law that gradually increased the full retirement age from 65 to 67, as well as further increasing tax rates for individuals paying into the program. This major modification was designed to both fix the immediate financial imbalance, as well as create a surplus for the coming decades.

Bringing things right up to the present day, the Social Security full retirement age for all individuals is currently between 65 and 67, depending on when the person was born.

In addition to Social Security, many people in the US also have private pension savings. This allows them to retire at an earlier age than the Social Security full retirement age or to supplement their Social Security income.

 

An overview of the Social Security System

The Social Security system in the US works on the basis of pay-as-you-go, which means that workers pay Federal Income Tax taken out of monthly or weekly wages.

To be eligible for Social Security benefits, you need to have accumulated at least 40 Social Security credits, which can be earned at a maximum rate of four per year.  One credit is earned for every $1640 of covered earnings for the year. Once qualified, the amount of benefits you receive in retirement is based on your average earnings over your working years, and not dependent on how many credits you’ve accumulated.

In 2022, the average monthly payment received by retired workers from Social Security was $1666.49, with the average spousal benefit payment being $837.34. If you are not retired and already receiving Social Security benefits, you can estimate the monthly amount you’ll receive when you qualify by using the Social Security Administration’s Benefit Calculator.

It’s important to know that your Social Security benefits don’t automatically kick in. To claim them, you need to apply to the Social Security Administration, which you can do online, by phone, or in person.

 

The Retirement Age Debate: Different Perspectives

 

The argument for raising the retirement age

Although it’s a somewhat contentious issue, many people believe that it’s a good idea to raise the retirement age, both for the benefit of the individual and for wider society. Those in favor of raising that age often put forward a number of points in support of raising the age:

 

  • It ensures the long-term sustainability of the Social Security system. As people live longer, there are simply more of them drawing program benefits for longer periods of time. This puts a strain on the government’s finances. Raising the retirement age can help to reduce the cost of the Social Security system.
  • People who work longer pay more taxes, therefore increasing government revenue. This could be used to fund other public services or to reduce the government’s budget deficit.
  • As the population ages, there are fewer people of working age. Raising the retirement age can help to increase the number of people in employment, which can, in turn, boost economic growth.
  • It allows people to work longer if they want to. Some people want to continue working past the current retirement age because they enjoy their work or because they need the additional income. Raising the retirement age gives people more flexibility to choose when they retire.
  • It could reduce poverty among older people. The Social Security program is the main source of income for many older people, and raising the retirement age could help to ensure that they have sufficient income in retirement, as they would’ve been contributing to their pension fund that little bit longer.
  • It may improve the health and well-being of older people. A number of studies have shown that people who work longer tend to be healthier and happier.

Those are the potential benefits of raising the retirement age, but what about the arguments for lowering the retirement age?

 

The argument for lowering retirement age

While there are many people who think the retirement age should be increased, a significant number feel it should actually be lowered, as working later in life may disadvantage people in a number of ways, and – in contrast to the opinions above – would not be beneficial for the individual or wider society. There are a number of points to consider when it comes to the pros of lowering the retirement age:

 

  • It gives people more choice and control over their lives. Some people may want to retire early to pursue other interests, such as spending more time with family and friends, traveling, or pursuing particular hobbies or lifelong passions.
  • It improves the health and wellbeing of older people. In contradiction to the same point made with respect to increasing the retirement age, some studies have shown that people who retire early tend to be healthier and happier than those who work until the standard retirement age. Lowering the retirement age would enable people to retire when they are still healthy and active, allowing them to enjoy their retirement years more fully.
  • It reduces unemployment. Raising the retirement age may well see older workers displaced by younger workers, increasing the rate of unemployment for those aged 60 or above – leaving them reliant on the welfare system. Lowering the retirement age means that this is less likely to be the case.
  • It mitigates the slowdown of economic growth. Older people in general tend to consume less than younger people. Raising the retirement age could lead to reduced consumption, whereas lowering the retirement age would have the opposite effect.
  • It reduces inequality. Lowering the retirement age could prevent low-income and manual workers from being disproportionately affected, particularly if they work in physically demanding jobs, which will become harder as they age.
  • It reduces demand for healthcare and social care services. Making people work until a later stage in their life may mean that they need more frequent access to healthcare and social services, putting a strain on the government’s budget and leading to higher taxes. Decreasing the retirement age would help ease this pressure on already-stretched public service resources.

Those are the pros and cons of both raising and lowering the retirement age, but what about something radical? What about abolishing the retirement age altogether?

Senior male worker in uniform in the warehouse with pallet truck

The argument for completely abolishing the retirement age

Perhaps even more controversial than raising or lowering the retirement age in the US is the notion that there simply shouldn’t be a set retirement age at all – that it should be completely abolished.

It’s a difficult debate to navigate as some people may feel they don’t want an age limit put on when they retire, as they enjoy their work and it keeps them active. Others, meanwhile, may feel that due to their financial circumstances, they have no choice but to keep working until later in life, regardless of the government’s position on the matter.

Again, there are a number of points often put forward by those in favor of abolishing the retirement age:

  • It gives people more freedom and flexibility. People should be able to choose when they want to retire, based on their own individual circumstances, such as their health, financial situation, family commitments, and personal preferences.
  • It reduces cases of age discrimination. The current retirement age system can lead to age discrimination, as older workers may be forced to retire even if they are still capable of working. Some employers may not even consider them if they apply for certain roles. Abolishing the retirement age would help to avoid this from happening.
  • It may very well improve the economy. Older workers tend to have more experience and knowledge than younger workers, or be familiar with systems and processes that younger workers know nothing about. Abolishing the retirement age would allow older workers to continue contributing their skills and would help to boost economic growth.
  • It improves and reduces strain on the welfare system in general. As the population ages, the demand for social care services increases. Abolishing the retirement age would allow older people to continue working and to contribute to their own social care costs, reducing the burden on the government.
  • It may, in some instances, increase financial security. For some people, retirement is financially challenging, and the option to work beyond a traditional retirement age can provide greater financial security and independence later in life.
  • It promotes healthy aging. Studies have shown that people who continue working later in life tend to be healthier and happier than those who retire early. They’re more cognitively engaged, as a result of having to think on a daily basis, and less likely to suffer from chronic illnesses. Abolishing the retirement age would encourage them to stay active and engaged in work.

So that’s (probably) the most controversial of the three positions covered in relation to the retirement age debate, but what about public opinion? And how do we compare to other countries?

 

The Retirement Age Debate in the US

 

Public opinion on the retirement age debate

Somewhat unsurprisingly, public opinion on the retirement age in the US is divided, but in recent years, momentum may be swinging away from raising the full retirement age. According to a recent poll by Data For Progress, first reported by Semafor, 65% of Americans believe that the retirement age should not be raised for young Americans. By political party, Democrats polled at 72% opposed, while Republicans polled at 59% opposed.  Independents came in at 65% opposed.

In addition to these stats, certain demographics tend to have particular opinions on the matter:

Age: Older people are more likely to oppose raising the retirement age, while younger people are more likely to support it.

Gender: Men are more likely to support raising the retirement age than women.

Education: People with higher levels of education are more likely to support raising the retirement age.

It’s a complex and nuanced debate, and there are a number of factors that influence public opinion on the retirement age. Some people believe it should be raised to ensure the sustainability of the Social Security system, while others believe it should be lowered to give people more flexibility to choose when they retire. There’s also a concern about age discrimination in the workplace, as previously mentioned.

 

Comparisons to other countries

When considering the retirement age debate as a whole, it’s worth looking at what other countries outside of the US do and their stance on the matter.

Overall, there’s a general trend towards raising the retirement age worldwide, as populations age and governments seek to ensure the sustainability of their own individual pension systems.

Here’s a brief overview of the retirement age in a few other countries:

United Kingdom: The retirement age in the UK is 66, but scheduled to increase to 67 between 2026 and 2028.

Canada: The normal retirement age in Canada is 65, but people can start receiving Canada Pension Plan benefits as early as 60.

Australia: The retirement age in Australia is 67, but is due to increase to 70 in 2035.

Japan: The retirement age in Japan is currently 65, but it is scheduled to increase to 67 in 2027.

Germany: The retirement age in Germany is 65 at the moment, but will increase to 67 in 2029.

France: At the moment, the retirement age in France is 62, but is due to increase to 64 in 2030.

Italy: The retirement age in Italy is currently 67, but there are a number of exceptions and early retirement options.

While the retirement ages in different countries are close to those set in the US, they’re not a fixed number. In some countries, the retirement age is linked to life expectancy, and increases automatically as people live longer. In other countries, the government has the power to adjust the retirement age as needed.

Much like in the US, the debate over the retirement age in other countries is likely to continue for the foreseeable future, with many variables coming into play as governments look to balance the financial viability of their pension systems with the need to consider what’s right for their people.

Shot of a mature woman hugging her husband

The Retirement Age Debate: In Conclusion

 

The retirement age debate – intrinsically linked to the pension age debate – is somewhat complex, involving many different opinions on what’s right and wrong (and why), and a number of different considerations for successive governments to take into account.

There’s the historical context of how we reached this point in the first place and why both a retirement age and Social Security were introduced in the US. Then there’s the Social Security system itself. Is it fair? Should some people pay more than others, in terms of their monthly or weekly contributions? Is the amount available enough to live on? Should the full retirement age be reviewed more frequently?

Where do you sit on the whole argument as to whether the retirement age should be raised, lowered, or completely abolished?

With people living longer than they used to and an aging population, is it possible to lower or abolish the retirement age? Would changing the retirement age in either direction lead to possible age discrimination in the job market? What are the economic and health implications of people retiring earlier or later?

One thing’s for sure: this isn’t a debate that will be resolved any time soon and there doesn’t appear to be a general consensus on what’s right and what’s wrong.

So, let’s test the waters and finish with a good, old-fashioned poll.

Click the option below that matches your opinion on the matter.

 

I believe the retirement age in the US should be: