Will the average retirement age continue to rise? – Retirement Research Center

Probably not-most drivers are playing their part.

Let's take a deep breath and take a step back from the daily news cycle where the Social Security Agency is repeatedly attacking and looking at the trends in recent retirement models and how they might look.

Before the 1880s, men usually worked as long as possible, and at the end of their lives they usually had only two years of “retirement”, which was usually due to poor health. However, starting around 1880, the proportion of the working older male population began to decline sharply (see Figure 1). Experts initially attributed the decline to civil war pensions, followed by rising incomes and shifts from agriculture to employment in large enterprises, and finally the introduction of social security and health insurance.

The downward trajectory ceased around the mid-1980s, and since the early 1990s, the labor force participation of male 55-64 and over 65 years has gradually increased. This pattern leads to an increase in the “average retirement age”, defined as the age (years and months) when the labor force participation rate drops below 50%. Based on this definition, in 2024, the average retirement age for men was 64.6, three years later than 1994, almost dating back to the 1960s (see Figure 2).

Many factors may have contributed to the recent increase in average retirement age.

• social Security: Changes in social security make work more attractive compared to retirement. Liberalization, and freedom in the full retirement age (FRA), eliminates the barriers that many consider to be working. The increase in FRA to 65 to 67 lower benefits increases for those claiming earlier. Moreover, the strengthening of delayed retirement credit has added incentives to continue working between the FRA and the age of 70.
• Pension Type: The shift from defined benefits to 401(k) plans eliminates built-in incentives. Furthermore, since 401(k) participants take investment risks, it takes longer for them to accumulate buffers to prevent premature exhaustion of resources.
• educate: Well-educated workers have less physical requirements, more job opportunities, more salary, and longer work.
• Improve health and longevity: The average life expectancy for men aged 65 has increased by about 3.2 years since 1990, until 2010, and there is evidence that people are healthier too. The correlation between health and labor activities is very strong.
• Retirement health insurance decline: The rapid rise in health care costs are accompanied by a sharp decline in employers’ health insurance for retirees. Therefore, workers have a great motivation to continue working until they are eligible for Medicare, 65, who is 65 years old.
• Work that requires less physical: As manufacturing declines, the service industry explodes with the opportunity for knowledge, which puts less stress on older bodies.

Will the early drivers of delayed retirement continue to have an impact? I'll argue “No.” Now all changes to the Social Security Program are done.

Most importantly, the factors that lead to the reversal of labor force participation by older workers seem to have run. Their effects will remain, so the average retirement age is unlikely to decline. On the other hand, they will give little motivation to increase the average retirement age.