At What Age Will You Retire?
The average retirement age in the U.S. is starting to resemble a U-curve. In 1900, it was 76 years old (I know! Surprising, right?). It didn't settle into age 65 until 1970, and then there was a precipitous drop such that, by 1990, it had dropped to 57. The retirement age grew after that point, rising to 60 in 2000 and nearly 62 in 2020. This upward trend continues, as the average age at which employed Americans say they'll retire is now 66.
But, beyond the fact that a growing number of Boomers want to retire the word "retirement," some major macroeconomic factors may lead to more of us retiring in our 70s rather than our 60s. With these changing retirement age trends in mind, I was recently reading this terrific report from an HR consulting firm that specializes in AI (How Experienced Workers Can Strengthen Your Talent Pool in a Shrinking Labor Pool) and discovered the following:
- The majority of U.S. employers believe that many of their employees expect to work past 65.
- The U.S. has a labor shortage that will only worsen in the next few years unless older workers stay in the workforce longer. In 2006, 63.4% of working-age Americans were employed, which dropped to 60.4%, meaning that 2 out of 5 people who could be working (age 18-65) are not working.
- To maintain the current ratio, especially with the declining birth rate (which means fewer young workers are coming into the workforce), the U.S. would need to see a 25% increase in traditional labor force participation by those 55+; if we don't get this solved, the U.S. can expect to see lower economic growth in the future solely due to having too small of a labor force.
The consulting firm McKinsey estimates that older adults who are not volunteering but want to do so could contribute an additional 88 hours on average per person annually for a total of 8.7 billion volunteer hours per year. Getting older adults who want to work but are not working to reenter the workforce could add up to $1.7 trillion in incremental annual GDP (up to 7.2 percent). So, there's a significant upside for society if we can work longer, whether we're getting paid or not.
One other strategy for preparing to work longer is "second-skilling." As outlined in this TED article about Singapore, second-skilling means you're developing your skills for a new job while you're still working. With an aging workforce and strict immigration, Singapore could be a model for resiliency for American workers who fear job obsolescence and know they need to master new skills.
In sum, whether by choice or necessity, many of us will continue working beyond the age our parents or grandparents retired. That's good news because unless the U.S. dramatically opens up its immigration policies (highly unlikely), we will experience a long-term shrinking of the economy.
If retirement is a provocative topic for you (and you hate thinking about it!), you might enjoy our Reframing Retirement online course that starts November 6.