Retirement Planning: Is 65 the New 45?

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Here in the U.S., the age of 65 has been viewed as the traditional retirement age for nearly a century now. It goes back to the signing of the Social Security Act by President Franklin D. Roosevelt in 1935.

This legislation established 65 as the age at which Americans who were eligible would be able to claim full Social Security retirement benefits. But what many people don’t realize is that in 1935, the average life expectancy for men and women in the U.S. was just 58 and 62, respectively. 

Today, these average life expectancies have risen by nearly two decades — to 76.1 for men and 81.1 for women, according to the Centers for Disease Control. What’s more, about a quarter of those who are 65 years old today can expect to live to at least 90, while one in 10 can expect to see their 95th birthday.

Medical Advances Prolong Productivity

The establishment of 65 as our nation’s unofficial retirement age was based not only on shorter life expectancies, but also on the medical research of the time. For example, physician William Osler suggested in 1905 that everyone 60 years of age and over should leave the workforce because the most productive working years were between the ages of 25 and 40.

This seems laughable now as the 40s, 50s and even 60s are often considered to be the most productive and highest earning working years for many people. Advances in medicine, healthcare, health education and health practices have enabled most people to remain productively employed well past the working ages recommended by Osler and other leading physicians in the early 20th century.

For example, did you realize that the first Kentucky Fried Chicken franchise restaurant wasn’t opened until Colonel Harland Sanders was in his 60s? Or that renowned British actress Judi Dench received seven Academy Award nominations after she turned 60? Or that pathologist James Parkinson first identified the disease that bears his name when he was 62?

What Is “Old Age” Today?

Despite all of this, the age at which individuals who are eligible to claim full Social Security retirement benefits has only crept up slightly — to between 65 and 67, depending on the individual’s birthdate. While the mid-60s was rightfully considered “old age” a century ago, it’s anything but old today.

In light of statistics like these, it’s worth asking the question: Is 65 the new 45? If it is, then Americans who are at or nearing their Social Security full retirement age might want to give some serious thought to exactly when might be the best time to retire.

For example, a man retiring and collecting Social Security benefits today at 65 years of age could conceivable live until he’s 90 or 95 years old. That’s a total retirement span of between 25 and 30 years. In comparison, a man who retired and started collecting Social Security benefits at 65 back in the 1930s had already lived seven years past his average life expectancy.

Entering the “Gray Zone”

Some retirement planning experts have coined a term for the stage between when healthy and able-bodied individuals turn 65 and when they truly can’t or don’t want to work anymore. They call this the “gray zone.”

Instead of completely retiring, many individuals in this stage are choosing to scale back in their jobs and work fewer hours or take part-time positions. For example, some people in their mid-60s are leaving high-stress jobs that require long hours in favor of part-time jobs that are less demanding. Others are starting their own freelance or consulting businesses that allow them to take on as much or as little work as they want.

This strategy may offer several benefits, starting with the fact that it allows individuals and couples to stretch out their retirement savings further. The longer you’re earning money, the longer you may be able to wait before tapping your retirement accounts and the more you may be able to contribute to these accounts.

Continuing to work during this stage on a part-time or scaled-back basis can also help ease the transition from full-time work into full-time retirement. Some people go through a difficult period emotionally after they retire as they adjust to having so much free time on their hands. Managing your time in the gray zone wisely can help you enjoy full-time retirement even more when the time eventually comes.

Rethinking Your Retirement Age

If you are near or in the gray zone, it might be worthwhile to look at your retirement plans in a new light. There’s nothing about turning 65 that means you automatically have to enter full-time retirement. 

Instead, you might prefer to ease into retirement over a number of years. Doing so could be good for your financial, physical and emotional health.


The commentary is limited to the dissemination of general information pertaining to Frontier Wealth Management, LLC's ("Frontier") investment advisory services. This information should not be used or construed as an offer to sell, a solicitation of an offer to buy or a recommendation for any security, market sector or investment strategy. There is no guarantee that the information supplied is accurate or complete. Frontier is not responsible for any errors or omissions, and provides no warranties with regards to the results obtained from the use of the information. Nothing in this document is intended to provide any legal, accounting or tax advice and Frontier does not provide such advice. This information is subject to change without notice and should not be construed as a recommendation or investment advice. You should consult an attorney, accountant or tax professional regarding your specific legal or tax situation.

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