Yea, we’re living longer! Boo, we’re living longer!
Longer life spans are a double-edged sword; it’s great to get more time, but how will we pay for it?
Now the Center for Retirement Research at Boston College is offering another wrinkle in the form of a uniform retirement age, and whether or not it makes sense.
From a policy standpoint, the conclusion is a solid ‘no.’
The reason? Individuals in different socio-economic statuses live at different lengths, which would therefore complicate matters.
“In the face of rising life expectancies, many policy experts argue that today’s workers can retire later and still spend the same fraction of their lives in retirement as past generations,” the center notes. “But such an argument assumes that all workers, regardless of socioeconomic status (SES), have experienced the same increase in life expectancy. In fact, evidence suggests that life expectancies for low-SES individuals have been improving more slowly than for high-SES individuals in recent decades, causing the life expectancy gap to grow.
The argument builds on prior research by estimating trends in mortality (the flip side of life expectancy) from 1979-2011 by education, a common measure of SES. These estimates are then used to see how much longer each educational group can work today if the goal is to maintain the same ratio of retirement years to working years as existed in 1979.
“In fact, between 1979 and 2011, the gain for men in the lowest education quartile was one third lower than for men in the highest quartile,” the center says, before adding, “If the goal were to keep the same balance of retirement to work years as in 1979, low-SES men could work to 68 today, while high-SES men could work to 69½. Thus, retirement policies that treat all workers the same hurt low-SES workers.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
