Munnell Doubts the Typical U.S. Retirement Age Will Keep Rising

What You Need to Know

Munnell says changes in Social Security rules have helped push up the typical retirement age in recent years.
She believes the shift away from defined benefit pension plans has eliminated built-in incentives for people to retire.
But she argues that those forces and others seem to have played themselves out.

Alicia Munnell — a retirement researcher who shapes what Congress thinks about retirement — says the forces pushing the typical U.S. retirement age higher have probably played themselves out.

Munnell gives that assessment in a brief about recent trends in the average retirement age.

The paper comes with a package of Excel spreadsheets on U.S. retirement trends.

The average retirement age for men increased steadily from 1995 through 2020, when the COVID-19 pandemic started, and it increased steadily from 2015 through 2019 for women, according to the data.

But “while the labor force activity of older individuals has increased significantly in recent decades, participation is still below where it was when Medicare was enacted in 1965, and further increases in the average retirement age seem relatively unlikely,” Munnell concludes. “In short, the recent turnaround provides little basis for changing the parameters of Social Security or Medicare.”

What It Means

Members of Congress could try to save money by increasing the normal Social Security retirement benefits and Medicare health benefits eligibility ages.

But if many retirement researchers agree with Munnell, that will decrease the odds that they can blame the increases on underlying labor market trends.

For financial advisors marketing retirement planning and income planning services, the implication is that assuming clients will tend to work longer may be a mistake.

Alicia Munnell

Munnell is the director the Center for Retirement Research at Boston College.

The Brief

Munnell writes in her briefs that Social Security and Medicare helped push the average U.S. retirement age lower in the middle of the 20th century.

In recent years, she says, changes in Social Security rules have helped push up the typical retirement age.

Other forces increasing the average retirement age have been the shift away from defined benefit pension plans, which has eliminated built-in financial incentives for people to retire relatively early; increases in typical education levels; the decline in access to employer-sponsored retiree health benefits; and improvements in older Americans’ health.

Munnell argues that many of those trends have flattened out, or started going in a different direction.

In the area of healthy life expectancy, for example, progress seems to have stalled, Munnell writes.

“While the percentage of men and women with a work-limiting disability declined between 1980 and 2005, the percentages held relatively steady between 2006 and 2018,” she says. “Moreover, estimates of health life expectancy at 50 — which combines the disability rate with changes in life expectancy — showed actual declines for lower-educated white workers and lower-educated Black men. Hence, substantial increases in the ability to work longer is unlikely to move the average retirement age in coming decade.”