Everything in society — housing, healthcare, the workplace, inflation and even the way urban planners design city streets — will be affected by the sheer volume of Americans turning 65 this year, and the years ahead.
More than 4.1 million people are expected to retire this year, and that figure will continue on through 2027, according to the Alliance for Lifetime Income’s Retirement Income Institute, which has been tracking the “Peak 65 zone.”
This year will bring the largest number of Americans celebrating their 65th birthdays, which the organization is referring to as retirement age. There is no one set age for retirement in the U.S., but the age 65 has historically been considered the norm (and for many Americans is their full retirement age for Social Security-claiming purposes).
These soon-to-be 65-year-olds may have plans for their upcoming birthdays, but many haven’t planned enough for their retirements, experts said.
“The number of 65-year-olds may be peaking, but we are far from peaking in the challenges of financial insecurity,” said Paul Irving, senior adviser at the Center for the Future of Aging at the Milken Institute. Having more people living longer can be seen as a positive, and is a nod to scientific advancements — but when it comes to retirement readiness, “we have stormy weather ahead,” he said.
Near-retirees simply aren’t prepared. About half of women between ages 55 and 66 have no retirement savings, compared to 46% of men, according to a U.S. Census Bureau survey in 2022. Employers have moved away from pension plans into defined-contribution plans, like the 401(k) plan, which puts the onus of saving for the future on the workers themselves — if they have access to such an account at all.
Older Americans are not the only ones in trouble if the tide doesn’t turn, according to Jason Fichtner, executive director of the Retirement Income Institute at the Alliance for Lifetime Income. Generations to come will also be negatively affected.
In the short term, a lack of financial security places pressure on how people pay for housing and healthcare in retirement.
In the long run, relying more heavily on local, state and federal governments to assist in supporting an older society without enough funds could mean higher taxes, which affect the ability of younger generations to pay for necessities, or more borrowing, which could lead to higher interest rates and, in turn, higher expenses when buying homes and cars.
It could also lead to more adult children needing to support their aging parents, slowing that generation’s ability to save for large life expenses such as college tuition, homes and their own retirements.
“That impacts everything,” Fichtner said.
There are some aspects of society that directly touch older Americans and will be pressured by this demographic bubble. One example is Social Security, which acts as a major source of income for retirees in the U.S. but is currently facing insolvency. The trust funds behind Social Security are expected to run out of money in the next 10 years, at which point beneficiaries could see a 20% benefit cut. This grim forecast does not take into account a significant influx in retirees beginning to claim benefits in this or the coming years.
Legislative issues aside, the program was not meant to sustain most of Americans’ financial needs — although for many retirees, it is their sole source of income. “Social Security is inadequate to fund the longer lives people are likely to have,” Irving said.
Healthcare is a significant expense for Americans, especially those who are older. Although people may be living longer, they could be faced with the need to manage chronic conditions or plan for long-term care. The need for long-term care will trickle down to younger generations, such as relatives who may have to become caretakers for their aging loved ones.
The first way to combat these issues will be to save more, Fichtner said. Individuals must contribute to retirement plans and opt in to automatic escalation when available, which will automatically increase contributions to retirement plans. The workforce must continue to automatically enroll employees into these plans as well, he said. As retirement inches closer, near-retirees need to get serious about what their retirement income will look like and where it will come from — Social Security, retirement plans, pensions and other sources, such as converting some savings into annuities.
Another step to fixing the problem may be a shift in perspective. “Even though life expectancy is now double what it was, the norms haven’t changed,” said Ken Stern, founder and chair of The Longevity Project, an organization focused on research surrounding life expectancy and aging concerns. “We take extra years of life and shove them into old age. We still think of those years as years of decline.” Instead, society needs to “rethink” the years in the 60s and beyond as an opportunity to stay productive. “What people can do in those extra years is changing radically,” he said.
But older Americans — those in their 60s and beyond — are still working, and when they retire, they may take on a part-time job, volunteer work or even caregiving responsibilities. Old age isn’t what it used to be, Stern said. “This is a really big change in how we live that we haven’t grappled with.”