New report suggests retirement age should rise

New report suggests retirement age should rise

POSTED: Tuesday, June 12, 2012 - 7:08am

UPDATED: Tuesday, June 12, 2012 - 11:17am

As life expectancy continues to rise, a new report suggests that governments need to raise the age of retirement in order to keep up.

The Organization for Economic Co-operation and Development said that by 2050, the average woman and man can expect to live roughly 24 and 20 years beyond retirement age respectively, up from 20 and 17 years in 2010. At the same time, retirement ages across many countries have stayed the same.

Without a change, the Paris-based economic think-tank said governments won't be able to pay for more people needing retirement funds for longer periods of time.

"Extending working lives in a situation of slowly growing or declining workforces should provide an important boost to economic growth in aging economies," according to the report, which was released Monday.

The United States could use a boost. Social Security has already begun paying out more in benefits than it takes in from workers' payroll taxes. The trustees of the Social Security program reported in April that the program projects a $165 billion deficit in 2012. Social Security could pay promised benefits in full through 2033, the report said.

Raising the full retirement age gradually to 70 years-old could help plug this deficit by reducing Social Security outlays by 13 percent, the Congressional Budget Office reported in January.

"With the fact that people are living longer, they should be partly responsible for meeting the cost of longer life expectancy," said Juan Yermo, head of the private pensions unit at OECD.

Today, the full retirement age in the United States is 66, up from 65 a decade ago. It is scheduled to increase by two months a year starting in 2017 until it reaches 67 in 2022. Meanwhile, 62 remains the age at which those who retire early can collect a percentage of their full benefits.

The OECD suggested, however, that "67 or higher is becoming the new 65."

"Extending the period over which you're contributing to the pension system would be less of a burden for everyone," Yermo said.

Experts say that the benefits of keeping people in the work force could spread beyond social security.

"People today in their sixties are not only living longer, but they're healthier," said Don Fuerst, senior pension fellow at the American Academy of Actuaries. "They can be a productive part of our society, and our economy needs for them to be productive .They could give our economy a boost."

But Fuerst and the OECD aren't expecting everyone to jump on board.

"Nobody wants to be told that they have to work longer to get the same pension," Yermo said. "But it's the inevitable result of the demographic challenges we're facing."

™ & © 2012 Cable News Network, Inc., a Time Warner Company. All rights reserved.

Comments News Comments

Not only are old people living longer and bankrupting social security, they also go to a doctor every time they sneeze, and are thus bankrupting Medicare. Incidentally, I am 76 and never go to a doctor.

Simple solution...bring manufacturing back to this country, put young skilled workers back to work, have a broader base to pay into Social Security...penalize HEAVILY those corporations that continue to send jobs off shore...make it close to a crime to send an American worker's job overseas before doing everything possible to employ our own. Get it right for those who have worked 40-50 years and let us have the retirement we've worked so hard for. Honor the elderly with respect and dignity!!

Post new Comment