These moves follow several recent age increases across Europe and among U.S. states. Faced with one of the worst pension shortfalls in the country, Illinois in March lifted the retirement age for new state workers from as low as 55 all the way to 67.
“If their parents are going to retire at 65 after working 40 years, they need to plan for about a 20-year investment horizon,” he says. “For my students’ generation, with life expectancy going up about a month a year, in their cases they have maybe 25 years in retirement they have to plan for.”
Greece, until recently, allowed workers in more than 580 job categories considered hazardous to retire with full pensions as early as age 50 for women or 55 for men. In response to its fiscal crisis, that country has raised the retirement age to 65 for most workers.
In Ireland, the government has proposed gradually raising the retirement age from 65 to 68. Hungary raised its retirement age in 2008 from 62 to 65 — one big reason why the ruling Socialists got trounced in parliamentary elections in April.
We have not raised retirement age along with our increasing longevity. That is workable, if you save enough extra during your work life to enjoy a longer retirement. However, we are not saving even enough to retirement properly even if the life expectancy had not increased over the last 50 years.
Governments have failed to take a sensible retirement strategy for dealing with longer life expectancies. They can lower benefits, move back the retirement age or increase the amount they put aside to pay benefits. Most likely it takes a combination of all 3, or at least 2 of the options. As I have said for a long time one smart move governments should make is to make it easier to ease into retirement by going part time. This is good for the economy and good for people and helps deal with the problem of extending the retirement age too far (where many that age have trouble working full time).