Retirement: How 87 is the New 65


How much do you really know about retirement? It’s commonly practiced throughout the world that, at a certain age, it’s time to leave the workforce. Yet do you know why it exists, or how it came to be? And does retirement as we perceive it even work anymore? 

The Beginning of Retirement as We Know It

The roots of modern retirement can be traced back to 1881, and Otto Von Bismarck. The Prussian prime minister posited an idea—government-backed support for the older members of society. This was a radical idea at the time—if you were alive, your worked. Today, we can’t fathom a world without retirement. 

It wasn’t until the end of the decade that an actual retirement system was implemented. The German government settled on age 70 to begin offering financial assistance. The catch? It aligned with the life expectancy of the time. The system was effectively created to support those who managed to live beyond expectations. It wasn’t designed to offer 20, 30, or even 50 years of support.

Fast forward to 1935, when the American government officially implemented their own form of government supported retirement. The Social Security Act was passed, and the official retirement age was set at 65. 

The life expectancy for men in 1935 was 58. 

We’re Living Longer

The modern expectation of retirement, to this day, is still 65. Yet life expectancy has steadily increased in the last 85 years. And thanks to advances in the medical field, and quality of life improvements, we don’t see the rise in life expectancy slowing down any time soon.

The chart below is a visual for how life expectancy has increased: 

Retirement age, 1950 projected to 2100

The blue line represents the UN’s life expectancy projections, and currently it’s sitting at about age 78. And chances are, you’re familiar with people who have lived well beyond that age. That means that, for many, they’ll be living on a fixed income for decades. 

Not to mention, age 65 in the present day is younger and healthier than age 65 in the 30s—some people are choosing to delay their retirement because they love what they do. And their health allows them to do so.  

So how come we still accept retirement as age 65?

Why We Can’t Be Typical

Typical financial planning is laser-focused on retirement. And yet somehow it still misses the mark. The problem with typical advice is twofold. First, clients are so focused on a future where they can escape the workforce that they don’t fully enjoy their lives in the present. And second, it’s based on accumulating an arbitrary amount of money that starts distributing at age 65. 

Often, the funds are undercut by the fees and taxes that accompany qualified retirement accounts. Combined with a longer life expectancy, we’re seeing an increase in retirees running out of money. 

The alternative approach is also twofold—encourage clients to find and pursue their passions, so that life does not become something to escape from. Then, to help clients build wealth that they won’t outlive by focusing on strategies rather than a “million dollar goal.”

Retirement: What Needs to Change?

In addition to educating clients about alternatives to wealth building, it’s time to start rethinking retirement. And fortunately, we did the math for you.

Since the age 65 was derived from life expectancy, we can look at it the same way today. The first step is to find the difference between life expectancy today and life expectancy in 1935. So if you divide 78 (2020 expectancy) by 58 (1935 expectancy), you’ll get 1.34482.

That means that life expectancy has increased by nearly 1.5%.

The next step is to multiply the rate we got (1.34482) by age 65, to show the what the increase would be. The result? 87.41379. 

Based on the same framework, the general retirement age should actually be 87 (or even 87.5). What could this solve? For starters, staying in the work force longer will help people to have more purpose and accumulate more wealth.

The typical retirement mindset does not serve us anymore—it puts us in a situation that leaves us at a disadvantage. It’s not enough to have “age 65 tunnel vision.” 

Changing the Retirement Narrative

The reality is, most people are thinking from an emotional place, and not at a critical level. The current retirement model is not sustainable, and it only becomes less so as our life expectancies rise. The best thing we can do for ourselves and our clients is to help them live more in the present, and to look at the big picture when it comes to finance. We need to begin helping our clients make the leap to strategies that will help them navigate and enjoy their longevity. It’s something to celebrate. 

Truth Concepts is a start—it’s a way to prove and reveal the Whole Truth about the financial products we have available. The next step is financial education—for yourself, as well as your clients. To continue your journey, attend a Truth Training. You’ll not only learn the software, but the Principles of Prosperity. In 3 days, you’ll learn how to show clients why much of the financial advice they hear is flawed, and what to do instead.