Forget 65, Americans should retire earlier

Economics editor Chris Farrell


Chris Farrell: Forget raising the retirement age. The goal should be to lower the age of retirement. Yes, you heard me right. How 'bout making it possible for everyone to retire at 55. What's more we can afford it.

Tess Vigeland: Economics editor Chris Farrell.

Chris Farrell: Too much of the discussion about the future of Social Security takes a doom and gloom tone. We're told again and again that to avoid financial ruin, we must make painful sacrifices. Yet the ambition should be to create a system that allows for greater freedom of choice for everyone in the last third of life, whether that means work or leisure -- or both.

There are many ways to keep the system solvent without hiking the retirement age. If the economy is healthy and prosperous, fears of a financial collapse fade into the mists of time. Don't want to bank on economic growth? How about doubling the cap on annual wages subject to the payroll tax, or lift it altogether? That policy change alone erases most of the projected future deficit of Social Security.

That's fine as far as it goes. But let's make the system better.

Nobel Laureate Robert Fogel has proposed a mandatory savings plan that would exist alongside Social Security. The savings would be yours, and the money would give everyone the realistic option of retiring around 55. If the typical household put 15 percent of its annual income into retirement savings, they could be financially free to pursue passions when they're 50-something.

Of course, the details of how we do it are almost less important than the bottom line. America is the world's wealthiest nation. We're also healthier and better educated than previous generations. The nation is rich enough to allow everyone to retire early, free to pursue their passions and their dreams.

Retirement used to be something only the wealthy could afford. Everyone else needed an income, and most aging folks struggled to get work even as their faculties deteriorated. For decades, social activists called for a system to provide the elderly a steady income. The dream became reality starting with the Social Security Act of 1935. It became possible for people to think of their last stage of life as a time of leisure, recreation and enjoyment. It's a remarkable social achievement that should be built on and expanded -- not contracted.

About the author

Chris Farrell is the economics editor of Marketplace Money.
Log in to post10 Comments

I don't think the government cares about me or anybody else, because if you look at the Deficit and the government not budgeting themselves, there out
for themselves. Which proves a
case in point, have ever read about the "Illuminati" lately it should scare you.

Glad someone is finally cutting though all the bs you hear about Social Security. However, you didn't go far enough. How about these facts:

1. one of the purposes of SS is to allow older workers to retire to make room for younger workers. Think we need that today?

2. So, the younger workers will have to pay a higher percentage maybe. Well, guess how much more I paid (I am 59) then my parents and guess who put that big trust fund in place. (I know, they robbed it). Guaranteed those younger folks will need/want the checks when they get there.

3. SS is a great national retirement plan. How about getting some of those public workers off their bloated public service pensions and on SS like everyone else.

I could go on and on.

In almost every community you will find retired people volunteering, participating in civic affairs, becoming involved with the arts, mentoring young people and often starting small businesses. In many ways they are contributing as much or more than when they held full time jobs. Earlier retirements allow them to do this while still enjoying some reward for years of hard work. We should structure our society to allow it.

Typically we are told that we need at least $1-2 million accumulated to retire safely and provide for a 30+-year time horizon. Therefore, it's a real stretch to contemplate many of us retiring before about age 75. (A pity, since aren't even enough jobs for everyone who WANTS to work, let alone those who are sick and tired of it...) But I warmly welcome any and all ideas to the contrary!

Personally, I'd love to retire at 55. The only thing holding me up is healthcare. If we solve healthcare, I'll bet a lot more people would retire earlier. What about Medicare at 55? Now you're talking!

Oops. I should have reviewed my comment before posting. It's "their" not "they're". Looks like I need to retire today!

We Boomers need to mature beyond our fragile egos. We are not indispensible. Several of my professional colleagues are delaying their retirement for years. Why? They're pensions are fully funded--at least, they are as of this moment--and there are plenty of recent graduates in our field seeking their first jobs. All I can come up with us that we believe ourselves to be too valuable to retire.

If I set aside my egoic "needs", it makes perfect sense to retire from my active practice by 60. Then I could repurpose my time and energy into mentoring new professionals, research and teaching in my field, and using my carefully-honed skills in volunteer work--here or globally. What an amazing difference we could make!

How about it Boomers? Ready to repurpose/recycle/retread by retiring? I am SO ready.

Farrell may be an economist, but he is clearly not an actuary.

I agree with you that people should be planning to retire at 55 or 60.

And I agree that it is possible.

There are two problem conditions that most North Americans suffer from, however:

1. A need is any luxury that their neighbor happens to have.

2. Instant gratification takes too long.

I have just started writing a book called "How NOT to Retire BROKE: Create $250,000 or More for Your Retirement in Seven Years or Less" in which I am going to make the point that saving 10 percent of your income is for amateurs and people should save at least 40 perent of their income, like I started to do when I turned 45 because I had no money saved at that time.

Of course, I think I have done well by saving 40 percent of my income and now I am not that concerned about not having enough for retirement.

But I was delighted to hear that someone is doing even better with their saving rate.

On January 17, 2010, in reply to a blog post "5 Reasons Why You Will Retire Broke and Unhappy," an individual who writes his or her own blog post (www.RetirementInvestingToday.com) stated:

"I personally am taking my retirement savings seriously and have by living very frugally been able to increase my savings to 60 percent of my gross earnings. I’m targeting a very early retirement. Achieving this high rate has been partly achieved by watching my Lifestyle Creep as you identify in Point 5. As I achieve pay increases I have actively decided not to change my standard of living."

In short, it was J.P. Getty who said, "People who don't respect money don't have any."

Ernie J. Zelinski
Author of "How to Retire Happy, Wild, and Free"
(Over 125,000 copies sold and published in 9 languages)
and "The Joy of Not Working"
(Over 250,000 copies sold and published in 17 languages)

completely agree! i retired at 55, planned it from my 40's, best thing ever

With Generous Support From...