Rethinking Retirement for Aging Populations

The drop in fertility and rise in life expectancy at the older ages has created a demographic scenario in which all rich countries, and several nearly rich countries especially in East Asia, face an increasingly larger share of the population that is older. This is both a challenge and an opportunity, but not a disaster. That is the assessment of David Rothkopf, editor and CEO of Foreign Policy, in an article in this month's Foreign Policy magazine. This is an issue, by the way, devoted to demographics, and I already blogged about an exceptionally good article by Paul Taylor, who coined the phrase that "demography is a drama in slow motion." But, back to aging...the point is one I have made before: we are living not only longer, but generally healthier. And technology and mechanization mean that most of us (albeit not all us, to be sure) are not physically exhausted by the time we reach our 60s or even older. Furthermore, a lot of people enjoy their job and/or their work experience and do not want to retire, and so society should not--and increasingly is not--demanding that they retire.

What once seemed like America’s terminal calamity — a looming problem that was so large it could never be managed — has not only diminished, it has actually changed character. This once-existential threat to the U.S. economy now looks very much like a potential bonanza.

You can see it in the gleaming billionaire faces of U.S. President Donald Trump’s cabinet — and indeed in the face of the president himself. After all, he is the oldest president in U.S. history and his cabinet has the highest median age (65) of any in the country’s 240 years.

Today, a 1-year-old in the United States has a 50 percent chance of living to 100. And it is likely that over that 100-year life, that child is likely to work from age 20 through age 80 or even older.

OK--if you've looked at Table 5.3 in my text or at the life table data on the CDC website, you'll know that a 1-year-old has a 50 percent chance of living to about age 80, not 100, given current death rates. But, if death rates keep going down, then Rothkopf's number could be right. In all events, the point is that older people are assets, not deficits, in the economy. Not everyone is, of course, but we need to be flexible in terms of sorting through those who can continue to make economic contributions (and let them do that) and those who cannot do that (and let them retire as necessary). With aging and retirement, there is no one size that fits all, and the more our policy-makers understand this, the better we will be able to successfully cope with the demographic changes coming our way.