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Americans Are Facing Shorter, Sicker Retirements

October 25, 2017

Financial advisors whose clients want to continue working past retirement age may want to talk to them about what awaits. As Americans stop working later and later in life, life expectancy in the U.S. is actually stalling — and those twilight years are increasingly beset with illness, Bloomberg writes.

The age when people can start claiming Social Security benefits in full is rising, from 65 for those who retired in 2002 to 67 for people retiring in 2027, according to the news service. Already, however, about a third of Americans between 65 and 69 continue working, and close to one in five are working past 70, Bloomberg writes.

Meanwhile, however, the age-adjusted mortality rate, which measures the number of deaths per year and has gradually declined since 1980, inched up 1.2% from 2014 to 2015, the first rise year over year since 2005, according to Society of Actuaries data cited by the news service.

At the same time, middle-aged Americans have increasingly more health issues.

Some 12.5% of those now in their late 50s who plan on retiring at the current retirement age of 66 have problems with “activity of daily living” such as dressing, getting out of bed or eating, according to a University of Michigan analysis cited by Bloomberg. Only 8.8% of Americans who could retire at 65 — when that was the Social Security retirement age — had such limitations. And a quarter of people between 58 and 60 who can retire at 66 say they’re in poor or fair health — a 2.6% jump from the same age group who could retire at 65.

Similarly, while among Americans with a retirement age between 65 and 66, 9.5% had some form of cognitive decline at age 58 to 60, that rate rose to 11% for those retiring at the current retirement age of 66, according to the study Bloomberg cites.

Researchers have linked Americans’ declining health to rising rates of alcohol and drug abuse, suicides and obesity, Bloomberg writes.

But the trend could be good for pension plans. As a result of the 0.2-year drop in life expectancy for pension participants from the last time the Society of Actuaries calculated it, pension plans stand to save up to 1% on their obligations, Bloomberg writes.

By Alex Padalka
  • To read the Bloomberg article cited in this story, click here.