Seventy: The New Retirement Age?

By Karen and Erica

Breaking news:  the International Monetary Fund has declared that people in their 70s today are as healthy, mentally and physically, as people in their 50s a few years ago. Therefore, the IMF proposes, the retirement age should be raised.

We aim to offer a new perspective on the old argument that aging will lead inevitably to slumping economic growth and mounting fiscal pressures. Data on individuals from 41 advanced and emerging market economies reveal that the recent cohorts of older people—those 50 and older—have better physical and cognitive capacities than earlier cohorts of the same age. When it comes to cognitive capacities, the 70s are indeed the new 50s: A person who was 70 in 2022 had the same cognitive health score as a 53-year-old in 2000. Older workers’ physical health—such as grip strength and lung capacity—has also improved.

Members of the Lustre community knew that, of course. We learned all about it from Linda Fried, when she was the head of the Mailman School of Public Health at Columbia. But having an august body like the IMF say so is big news. 

And why is the IMF interested? Because the IMF is concerned about decreasing birthrates and extended longevity, which together could shrink the economies of many countries. The solution is apparent:

Consider the following scenario. First, suppose governments implement additional public health measures that narrow cross-country gaps in the functional capacity of older individuals by about one-fourth over the next four decades. Second, suppose these health measures are complemented by changes to retirement plans, training programs, and more flexible work conditions that incentivize a gradual rise in the effective retirement age in line with improvements in life expectancy. Finally, suppose that policies narrow gender gaps in labor force participation by three-fourths by 2040.

Our simulations indicate that these policies could boost global annual output growth by about 0.6 percentage point over the next 25 years This offsets almost three-fourths of the estimated demographic drag during that period. (Citation omitted.)

That is surely important for everybody’s well-being. It is also consistent with one of Lustre’s key operating principles–that since people are enjoying healthy longevity they should not be put out to pasture–ever, but certainly not at the age they are now generally being retired. Taking a path consonant with modern longevity would boost not only the economy but also our mental health, which in turn would also reduce drag.

Denmark is listening. Its retirement age is now 70. We think that’s a good move, though of course society has to buy into the notion that a person approaching 70 can still function in the working world. Increasing the retirement age but treating workers over 60 as if they are second class citizens, or as if they are taking jobs from new entrants into the workforce, will be non-productive. (We note we could not find a news blurb about the Denmark story that was accompanied by an image showing people actually working.) And there are people who will not want to work, or who cannot work. Society has to think that through as well. We know there are many Lustre members who are very happily retired. But there are others who resent the barriers that block them from continuing to play a role in the working world.

The point is not so much that everyone should work until they are 70. The point is that most people are capable of work until then—and even long after that. They should not be treated as if they are over the hill. Doors should not be closed in their faces. There are good economic reasons to rethink the retirement age. And psychosocial reasons as well.

So the real call to action is to create new ways of working. A person who has had a forty-year career can work faster than one who is just starting out. As we love to say: The younger run faster, but the older know the shortcuts. To make effective use of our skills and experience, post-career jobs should be different than career jobs–so we can share the shortcuts.

Just for the fun of it, we asked ChatGPT what was an ideal retirement age for white collar workers, given the economic needs of the United States. Remarkably, it came up with about seventy. Chat GPT then asked if we would like ideas about how to achieve that goal. We said yes. We were then offered ideas for employers, employees and policy makers.  ChatGPT then drafted a memorandum to be used for pitching the idea!

One of its fundamental thoughts: Create phased retirement paths:

• Allow older employees to reduce hours, shift roles, or work seasonally.

• Example: Move from team lead to mentor/adviser/consultant role.

Exactly! What a smart little LLM!

Let’s agree with ChatGPT and use our imaginations to come up with a new post-career paradigm–one that is centered around an intergenerational workforce with different types of jobs for different levels of experience. Our lives will be better if we do.