When Social Security was established in 1935, average US life expectancy was 60 for men and 64 for women. Now. it is 75 for men and 80 for women.

This means that when the Social Security system was created, women and men were pretty much expected to work ‘till they dropped. Today, men can expect to live about ten years beyond retirement age, while women can expect to live 15 years after they stop working.

This is a significant development.

In terms of the Social Security system, it explains why the system is heading towards an eventual collapse, unless early retirement is eliminated, and normal retirement age is raised. In terms of individuals, it means that the entire concept of retirement must be redefined.

The Lost Decade and Dwindling Nest Eggs

We’ve all been through a lot lately. The Lost Decade of 2000-2009, where jobs grew slowly, incomes declined, and the cost of health care and education reached record highs. A miserable decade, culminating in the Great Recession of December 2007 – June 2009. Many of us are still feeling shaky about the whole thing and are not convinced that turbulent times are indeed behind us.

So what does this mean to individuals who are facing great financial uncertainty, coupled with unprecedented longevity? It means that many of us will need to work longer than the “normal retirement age” of 66.

As of now, you can retire at any time between 62 and 70, with your benefits prorated to reflect your age. If you retire early you’ll receive less benefits, and if you wait until 70, you will receive more. When it gets down to it, picking a date to start collecting your benefits is basically a gamble on how long you are going to live! But on average, if you expect to live until around 75, retiring from paid work and starting to withdraw benefits at age 62 is probably not the smartest move, financially speaking.

What if You Want to Work – But Can’t?

As if the situation isnt complex enough, another issue is that even if you want to keep working, not all employers will be open to employing older workers. As we’ve discussed before, age-based discrimination is unfortunately fairly widespread, and even if illegal, there are ways to make it appear as if the company is simply downsizing, and not necessarily getting rid of older employees.

The solution is twofold: you need to save enough for a possibly long retirement, and you need to find a way to make money well into your seventies, by starting your own business or by working part time. You likely won’t make much – but with your savings and social security benefits, that extra income might be what it takes to help you live comfortably and avoid running out of money.

What Are People Like You And Me Planning To Do?

In an interesting discussion on Facebook, I asked my Facebook friends, “Will you be able to retire?” The answers I received were interesting, and definitely reflect a change in the way people look at retirement:

“Weve planned for non-retirement.”

“I never really expected a stereotypical retirement of just hanging out doing whatever seemed fun at the moment, traveling, supper at 4pm, and all the rest. Instead, I see some form of engaged activity until I keel over, and I would expect that some of that produces a way to continue providing for myself. Whether it’s income from a book I’ve yet to complete, a garden I tend for my own groceries, or maybe even some kind of part-time employment I can’t yet envision… Whatever it is, it’ll be because I enjoy it. I refuse to fear the future.”

“Ill be working as long as I can, then living on Social Security after age 70.”

“I dont have a plan. Im winging it from month to month and am confident that I will manage somehow Im great at getting by on very little when I have to. Maybe I should be more worried about money but truthfully, Im grateful for my health and am doing what I can to invest in that.”

“We planned for early retirement and made it. However, with the economy, rising prices and other reasons, working periodically keeps us from having to tap into our savings without having to adjust our standards of living.”

Society Will Needs To Adjust

With longer life expectancy and less in the bank, more and more people are not planning to ever retire. It’s not necessarily bad news – keeping active and alert and exercising those brain cells may actually mean better, healthier aging. But this will require a shift in the way our society views older people. Instead of expecting the over-65 crowd to politely disappear into some sunny retirement community in Florida, we should accept that people can be an active, contributing part of society for as long as they wish to be.

Editor’s Note: I’ve begun tracking my assets through Personal Capital. I’m only using the free service so far and I no longer have to log into all the different accounts just to pull the numbers. And with a single screen showing all my assets, it’s much easier to figure out when I need to rebalance or where I stand on the path to financial independence. They developed this pretty nifty 401K Fee Analyzer that will show you whether you are paying too much in fees, as well as an Investment Checkup tool to help determine whether your asset allocation fits your risk profile. The platform literally takes a few minutes to sign up and it’s free to use by following this link here. For those trying to build wealth, Personal Capital is worth a look.

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