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Retiring in your 60s is becoming an impossible goal. Is 75 the new 65?

Retiring in your 60s is becoming an impossible goal
Retiring in your 60s is becoming an impossible goal

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Retiring in your 60s is becoming an impossible goal: Traditional retirement at 65 is becoming an unrealistic or even unreachable goal for many people around the world due to rising life expectancy and rising expense of living. Notable people in the financial industry share this new outlook.

During the March release of BlackRock’s annual investor letter, CEO Larry Fink delivered a stern warning. Fink warned that many people may not be able to retire at 65 due to rising living costs, social safety net strains, and increased life expectancy around the world.

The upward trend in life expectancy is evident. The United Nations reports that the average lifespan of a human being has risen from 67 to 73 years between the years 2000 and 2019. One in six individuals on Earth will be 65 or older by the year 2050, according to predictions. Retirement planning and social assistance systems face major challenges as a result of demographic shifts, which are causing more people to leave the workforce than join it. This poses a critical crossroads for many countries.

The gap between rising life expectancy and flat retirement ages is highlighted by Rebecca Sear, a professor of population and health at the London School of Hygiene and Tropical Medicine. Policies regarding retirement have stayed mostly intact despite changes in the health and economic climates.

In addition, the logic behind the obsession with the mid-60s as the typical retirement age is called into question by Gal Wettstein, a senior research economist at Boston College’s Center for Retirement Research. Without any evidence, he implies that this age boundary may have started as a tool to get people to stop working when they were getting close to the end of their lives.

Nonetheless, this antiquated model of retirement age persists in government programs and laws. In the United States, for example, one can start collecting Social Security benefits in full at age 67 and Medicare, the national health insurance program, at age 65.

However, with people living longer and healthier lives into old age, the gap between traditional retirement ages and current realities is becoming more and more apparent. Cardiff Metropolitan University senior lecturer in finance Chris Parry draws attention to the discrepancy between the changing demography of the elderly and the pension systems that have not kept pace with them.

Further aggravating pensioners’ financial woes is the deterioration of intergenerational wealth transfers. The transfer of wealth from one generation to the next has long been a reliable means of providing for subsequent generations. The current relationships, however, show a flip side, with wealth passing down through grandparents to children, who are financially disadvantaged.

The conventional retirement age of 65 seems more and more implausible in view of these changing paradigms. All throughout the world, workers are staying in the workforce far into their 70s in order to save enough money for retirement. For many, the goal of retiring comfortably in one’s mid-60s is becoming an elusive fantasy.

A more proactive approach to investing at a younger age and embracing the idea of working beyond 65 is the solution, according to Larry Fink. The 65-year retirement norm is inadequate, and several governments are planning to increase the pension age to reflect changing demographics and economic realities.

In the end, retiring in one’s 60s is becoming less of a realistic aim and more of a commonly expected reality. Parry sums it up well when he says, “I think 75 is the new 65” in reference to retirement goals in the present age.

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