Is 80 the new 65?

Is 80 the new 65?

Thanks to the Great Obama Depression, 80 might be the new 65. 

From Bloomberg:

American International Group Inc. (AIG) Chief Executive Officer Robert Benmosche said Europe’s debt crisis shows governments worldwide must accept that people will have to work more years as life expectancies increase.

“Retirement ages will have to move to 70, 80 years old,” Benmosche, who turned 68 last week, said during a weekend interview at his seaside villa in Dubrovnik, Croatia. “That would make pensions, medical services more affordable. They will keep people working longer and will take that burden off of the youth.”

Enlarge image 

The crisis, now in its third year, threatens to destroy Europe’s 17-nation currency union as Greece contemplates exiting the euro and Spain sees its bond yields rise and banking industry falter. German Chancellor Angela Merkel hardened her opposition to joint debt sharing in the euro region as U.S. President Barack Obama singled out Europe’s leaders for not doing enough to arrest the crisis.

Greece abandoning the euro could be a disaster for the country and Europe must work to keep that from happening, said Benmosche, whose company was the world’s biggest insurer before it took a U.S. bailout.

“People in Greece have to see there is no easy way out of this” and the government must get them to work longer, he said in the June 2 interview on the Adriatic coast. “If not, and if they go to their own currency, I think they will see huge inflation and it will be devastating for people on fixed incomes.”

Life Expectancy

Greece, where the average life expectancy is 81.3 years, has an effective retirement age of 59.6, among the lowest in Europe, according to data compiled by Bloomberg. French President Francois Hollande, the Socialist who was sworn in last month, has pledged to cut the retirement age to 60 from 62 while increasing corporate and bank taxes and introducing a 75 percent levy on earnings of more than 1 million euros ($1.2 million).

Retirement is a phenomom that has only been around for a couple of generations.  A century ago, people worked until they either died or could no longer physically work. 

When Social Security was introduced, the average life expectancy was only 63 and no one could start drawing benefits until 65.   The numbers worked.

Since then, American life expectancy has steadily grown until now it is well into the 70s. 

The numbers no longer work.

The end result of the Great Obama Depression may well be Americans staying in the work force well into their 70’s. 

Americans will decide whether we like this change or not but no matter whether we like it or not, it will probably be our new reality.