The fact is, when Social Security set the retirement age at 65 back in 1935, the average life expectancy of Americans was only about 60 years for men, and 64 years for women. Even so, the Social Security Administration points out that those low numbers are due—at least in part—to high infant mortality rates in the 1930’s. The SSA also states that among Americans who turned 21 in 1896, about 54% of men and 61% of women would live to see their 65th birthday in 1940. And once they reached 65, Americans in 1940 could expect to live about an additional 12-15 years.
Fast forward to today. According to the Chicago Tribune, Americans who turned 65 in 2011 are projected to live another 21 years, on average, to age 86. And, for those who reach age 86, they can expect an additional seven years of life expectancy—to age 93. As the article, titled Retirement now requires those living longer to work longer, sums it up:
While 75 may be the new 55, there are some significant ramifications of the population boom. Whereas previous generations could plan on retirement lasting 10 or 15 years, today we have to count on 25 or 30 years, making the task of saving enough a mighty difficult one.
Even the SSA has reacted to the increased life expectancies, pushing full retirement back to age 67 for those born after 1960. (You can calculate your full Social Security retirement age here).
The moral of the story is that most of us will have to work longer in order to afford a longer retirement. Make sure you understand how far your retirement plan will take you.