What is the right retirement age for you? While the average retirement age for Americans is 61 years old, many who like their jobs are working longer. This is especially true as they anticipate living longer with improved prevention approaches and cutting-edge medical advances, ranging from bespoke cancer medications to gene therapy.
Notable increases in work life are not flights of fancy. Seventy years ago, people who lacked retirement savings worked well into their 70s if they lived that long. This was in spite of jobs being far more physically demanding. In other words, “retirement” is a recent state.
Working longer
From 1992 to 2020, the labor force participation rates of those 65 to 69 steadily rose from 20% to 38%. Similarly, the workforce participation rates of those 70 to 74 have risen from 11% to 24%over this period, while those over 75 increased from 5% to 11%. These increases register across all levels of education but are most pronounced among college graduates.
That is to say, society’s high earners are the most likely to extend their work lives, and most have now learned how to work from home. They not only produce; they continue to pay into Social Security, private pension plans and taxes. Not surprisingly, many surveys show that the main reasons people give for working after age 64 are social connectivity, relationship building and additional spending power.
These figures show that if we do it right, we can afford an aging society. In fact, healthy longevity is essential for our society, and can partially offset declining birth rates. Mature high earning workers can balance the lower percentage of lower-income, younger citizens contributing to Social Security and paying taxes.
However, if increases in longevity are isolated to a few groups, overall medical care costs will continue to spike. And that financial burden can overwhelm a country’s ability to handle an aging — and unhealthy — demographic.
Longer health-spans
Healthy aging, on the other hand, can drive economic growth. Focusing on growing our “health-span” — that is, the number of years a person can be mentally and physically active — more than mere “lifespan” translates into longer work life and greater societal wealth. And the benefits grow rapidly.
If 1% of the 160 million workers in America, which is roughly half the number of workers who retire annually, decide to work one year longer, they generate $260 billion towards our Gross Domestic Product (GDP). If they work five years extra, retiring on average at age 66, they create $1.3 trillion in wealth — and this repeats every year for every cohort that reaches retirement age.
Put another way, if half of us work five years longer because we are healthy and enjoy our jobs, we add over 5% to GDP, which addresses our national debt and Social Security solvency. Increasing our productivity is good policy and good politics, so we should be hearing this pitch on the campaign trail.
In addition, as improved health delays the cost burden of treating illness, it provides more time to buffer the cost of the final expensive years of aging. Over 8% of total U.S. medical spending is for the final year of life and 17% of all health care spending occurs in the final three years of life. This means that $323 billion is currently spent on people in their final year, and $635 billion on those in their final three years.
If improved health delays these expenses by a five to ten years, money that would otherwise have been spent on sick people can instead be used in more productive ways. If we delay the last-year-of-life medical spending of $323 billion for five years, society receives a gain worth trillions of dollars over time.
This is best understood by imagining what their return would be if people took the money they would have spent on medical outlays and invested in a diverse stock portfolio. Plus, we will have more time with our loved ones.
Healthy living is patriotic
In addition, because an estimated 75% to 80% of all medical outlays are for lifestyle-related diseases — $3.7 trillion of $4.7 trillion total medical spending — taking voluntary lifestyle steps to live more healthfully dramatically reduces medical costs. If only 40% of the population adopts healthier habits, there would be a roughly $1.5 trillion annual reduction in health care spending.
This represents a staggering 5.7% of GDP saved each year simply through healthier lifestyles. Every year! Think about what a $1.5 trillion yearly decline in medical outlays would achieve.
These savings are very possible — remember, our genes haven’t changed since 7% of GDP was spent on medical care in the 1970s. But our lifestyle choices have, and that has increased the incidence of chronic disease.
In other words, small lifestyle changes like taking a daily walk and avoiding foods with added sugar aren’t just good for our bodies: They’re good for America.
As less money is absorbed by medical costs and more people begin to enjoy good health and work longer, the hand-wringing about shortfalls in private, municipal and state pensions, as well as Medicare and Social Security should abate.
There is, of course, a cloudier side of increased longevity. While the benefits of wise decisions grow, the costs of unwise decisions also grow. If the gap between healthy and unhealthy aging widens, so will disparities in income and overall wealth. The longer we live, the more our decisions predict our health.
So be a patriot — by living a longer and healthier life.
Michael F. Roizen M.D. is professor of medicine at the Cleveland Clinic Lerner College of Medicine at Case Western Reserve University. Albert Ratner is a student of population economics who was CEO and co-board chair of NYSE company Forest City Enterprises. Peter Linneman, Ph.D, is an emeritus professor at the Wharton School and founding principal of Linneman Associates. Mehmet Oz, M.D. is professor emeritus at Columbia University, and was the multiple Emmy awarding winning host of The Dr. Oz Show.
First Published: October 8, 2023, 9:30 a.m.
