Why is the Retirement Age 65?

Here’s an interesting question:

Why is the Retirement Age 65 in most developed countries?

I’ll give you a second to think about it. Or google it.

Here’s a hint: the retirement age of 65 was first selected in 1880.

Here’s the answer: the retirement age was set at 65 because when it was first introduced by Otto von Bismarck, hardly anyone lived that long. Here’s a quick rundown on that:

The age of 65 was originally selected as the time for retirement by the “Iron Chancellor,” Otto von Bismark of Germany, when he introduced a social security system to appeal to the German working class and combat the power of the Socialist Party in Germany during the late 1800s. Somewhat cynically, Bismark knew that the program would cost little because the average German worker never reached 65, and many of those who did lived only a few years beyond that age. When the United States finally passed a social security law in 1935 (more than 55 years after the conservative German chancellor introduced it in Germany), the average life expectancy in America was only 61.7 years.

I’ve asked this question in classes recently, and most people choose an answer that is something like ‘because by the time we reach 65 years, we’re ready for a break.’ But the fact that most of us can now think about being retired for 15 years or so is completely an accident. The original idea is that we retired at 65 because no one was supposed to live past that age.

What changed?

Innovation, and lots of it.

There has been technological innovation, like x-rays and PET scans.

There has been a range of medical inventions that have been turned into product innovations, like penicillin, chemotherapy and vaccinations.

There have been process innovations – possibly the biggest medical invention since Bismarck’s time has been germ theory, which has led to radical process innovations like hand washing and sterilization.

There have been service innovations, like the provision of universal health care in, well, most developed and developing countries.

Basically, all of the medical services, procedures, medicines and routines that keep us alive longer have been invented since the retirement age was set at 65 years of age.

The simple fact of the matter is that the only reason we can expect to have a retirement is innovation. Remember that the next time someone tells you that innovation is just a buzzword that doesn’t mean anything.

Student and teacher of innovation - University of Queensland Business School - links to academic papers, twitter, and so on can be found here.

Please note: I reserve the right to delete comments that are offensive or off-topic.

10 thoughts on “Why is the Retirement Age 65?

  1. Good question – and historical analysis – but I’d go a step further, and ask “Why do we have retirement?” or “What is retirement?” I imagine that in 1880, in the midst of the industrial revolution, when increasing numbers of people were [becoming] cogs in the industrial machine, relatively few people were working jobs they loved, and so they did need a break.

    If one’s work is well aligned with one’s passion or calling, how does one stop doing that work – or why would one stop doing it? I can imagine shifting to new ways – or rates – of contributing, but it seems that the closer the alignment, the less that “retirement” seems like light at the end of a tunnel.

    That said, I have to admit that this may be overly idealistic. Recent Gallup polls suggest that many U.S. workers view the ideal job as not very engaging. I don’t know whether engagement in work is more valued – and widely experienced – in other countries, but perhaps we need more innovation in promoting pathways through which people can work on things that really matter to them (and the world) … which may reduce some of the economic and health strains in society that “retirement” at such relatively young ages increasingly produces.

  2. Thanks for that Joe. I’m 100% with you on the last paragraph with regard to innovating to improve engagement/working on things that matter – it’s critically important.

    I also agree that when there’ s alignment, then retirement doesn’t make much sense. I don’t see myself retiring at all – your phrase of ‘shifting to new ways – or rates – of contributing’ captures my view of the future perfectly. But I’m pretty lucky in that I really enjoy what I do and I do feel a calling to do it…

  3. It’s fortunate when you’re able to approach it that way – too few people can. Which brings us back to your original point, that it is important to find ways to make work better for people, and more aligned with their values and interests…

  4. Does that life expectancy value include infant mortality? If so, it’s confounded. Infant mortality was likely much higher in 1880, suggesting the average life expectancy (of those surviving infancy) may have been much greater than 65.

  5. Which leads to the seemingly obvious conclusion that the retirement age be transitioned over the next decade or so to 70 (or higher as medical advances increase both quality and length of life). Not only does raising the retirement age solve a great many Social Security and worker shortage issues it is also fair. In the 1930’s retirees at 65 had probably worked 50 years. Basically since they were 15. Now, with much more education, the average age to join the workforce would be closer to 20 so people would still be working 50 years until retirement.

    And we must admit as tedious as our jobs are there are few dangerous, toxic, back breaking jobs anymore. I can’t imagine 50 years at a desk being quite the same as 50 years of farming or working in a mine.

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