One of the “givens” I often see in discussions about retirement is the idea that previous generations didn’t have much of one. Great-grandpa got to the end of his working life, got his gold watch and keeled over.
Short or non-existent retirements certainly were the rule before the 20th century. People usually worked until they died or until they were physically unable to continue. There were some exceptions; Civil War pensions allowed older veterans to leave the workforce earlier and some companies launched mandatory retirement policies in the late 1800s. The fact remains, though, that many people ended their lives in abject poverty because they could no longer work. That was what prompted the creation of Social Security in the 1930s.
It’s not true, though, that people in the 20th century died shortly after turning 65. That’s obvious from this table of historical life expectancies compiled by the Social Security Administration.
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Check out the last two columns. Even in 1940, men could expect to nearly 13 more years and women nearly 15. Life expectancies at age 65 have certainly gotten longer (20% longer for men, 33% for women) since 1940. The bigger change has been in the percentage of people making it to 65. Improving safety standards and better health care meant a whole lot more people got a shot at having a retirement.
(And these figures don’t account for reductions in infant and childhood mortality, since the numbers in the second two columns reflect adult survival rates from age 21 to 65.)
Another big change came in 1961, when the earliest age for collecting Social Security benefits dropped to age 62. That plus longer life expectancies contributed to lengthier retirements.
The trend seems to be reversing. The average retirement age for men has risen in the past 20 years from 62 to 64. The average retirement age for women also increased from 59 to 62.
That still leaves a lot of years to support yourself, which is why delaying retirement and working part-time in retirement are often good strategies for making your savings last.
It makes no difference to me how long the average retirement is. What matters to me is how long my retirement will be and how much of my retirement savings goes to my estate when I die. I have quite a bit saved for my retirement and, providing the financial system doesn’t tank, it should last for a number of years. I’m 62 now and working full time. I don’t plan to stop working until I’m eligible for Medicare, unless I lose my job. My father died at 74 and my mother died at 67, so my prospects for a long retirement aren’t that great. It’s practically impossible to predict the length of any individual’s life, so the question of when to retire has to be decided by some other criteria.
Right, on an individual level there are all kinds of unknowns. It’s interesting how those unknowns add up to a pattern, though. For example, actuaries for insurance companies don’t know exactly which of their policyholders will die next year, but they know to an astonishingly accurate degree how many will. People who are retiring soon don’t know how long their retirements will last, but actuaries tell us a certain percentage will get to age 85 and another chunk to 95.