It’s Time We Rethink the Retirement Age, New Study Suggests

65. That’s the current ‘full retirement’ age in the US where individuals can use Social Security and Medicare benefits, and it’s been that age for what seems like forever.

Back when the age was set in stone, 65 was a lot older than it is today. Today, many late-career workers are able to keep working well past 65 because of improvements to healthcare, quality of life, and a step away from back-breaking day-to-day work.

This all mean adds up to the fact that many Baby Boomers – the generation currently reaching retirement age en masse – are simply postponing retirement, opting to either stay in their current job or step down, take a retirement package, and going to do something else.

Now, new research from Stanford claims that many workers are waiting until at least the age of 70 before stepping down, and surprisingly that is a good thing.

“The reason? Working a few more years or drawing your Social Security benefits later can significantly boost income. That’s particularly important as fewer workers receive pensions. Americans largely have taken on the responsibility for saving for their retirement—often failing to do so adequately,” reports Sarah Skidmore Sell from Phys.Org.

In other words, as lead researcher Steve Vernon, from the Stanford Center on Longevity, puts it: “We keep adding years of life and it all got tacked on to the retirement period and it never changed the retirement age.”

Vernon and his team set out to see what way is best for saving for retirement. They analyzed over 300 common methods and found that the very best way to ‘pensionize’ retirement savings alongside Social Security by waiting until the age of 70 to retire.

How does one do this, though?

According to Vernon, who calls this approach the “Spend Safely in Retirement Strategy,” almost half of middle-class workers save between $100,000 and $1M dollars for retirement. By waiting until age 70 to draw from retirement accounts and only drawing as little as necessary, retirees can couple these savings with increased Social Security benefits and, in effect, pay themselves on a regular basis like a pension would, providing an income much longer than a traditional retirement cash out.

“Stanford researchers estimate that Social Security benefits represent up to two-thirds of a middle-income retiree’s retirement income if they start drawing them at age 65. If they wait until 70, it represents up to 85 percent, according to the Stanford research,” Sell reports.

Vernon also reports that if someone is a bit behind on their savings plan, waiting can be an incredible boost. While it makes sense that many people want to retire as early as possible, planning and waiting can have huge benefits.

He also says that some individuals might be able to gradually step down, working only what they need to to save for retirement in the years leading up to it. This largely depends on the situation.

The team claims that this whole mess started when retirement meant something different than what it does today. Back when retirement was first thought up, it was meant to give a person just a few years of relaxation before passing away.

That was back when 65 was consider old. Nowadays, with the life expectancy on the rise all of the time, 65 is no longer old. In fact, many people leave their current roles at 65 and start something completely new.

Despite the fact that many are living well beyond 65 or 70 in today’s world, the retirement has has largely gone ignored, though ignored might be the wrong word because policies are still being made that use 65. A better way of putting it might be that 65 just hasn’t changed despite all we know.

Until it does, retirees – many of whom cannot retire because they lack the funds – will have to work longer, though if the team’s findings are accurate, this is a good thing because those workers will eventually be more secure in their retirement.

“Financial pressures are driving many employees to retire later,” Pat Rotello, a senior consultant at Willis Towers Watson, told Sell.

“Employees with money worries are more likely to keep working past normal retirement age to help sustain their income.”

So, will the new retirement age become 70 sometime in the future? Who knows. One thing is certain, though, waiting a little longer to retire can give retirees the financial boost they need to do so successfully.

You can read the Stanford report for yourself here.

Josh Hrala

Josh is an HR journalist and ghostwriter who's been covering outplacement and offboarding for over six years. Before pivoting to the HR world, he was a science journalist whose work can be found in Popular Science, ScienceAlert, The Huffington Post, Cracked, Modern Notion, and more.