Working until 70 isn't so bad provided you feel 55

Business Times

03-06-2025

DENMARK'S recent move to increase the statutory retirement age to 70 for those born after 1970 – the highest in Europe – highlights an obvious and potentially troubling reality: Most of us are facing longer working lives, but that also means we need to remain healthier for longer.
While linking the pensionable threshold to improving longevity is fair, up to a point, doing so risks exacerbating health inequalities because the poor become sick and die sooner than the rich. So the focus must be on extending healthy life expectancy for everyone.
Closing the gap between lifespans and so-called healthspans can help build public support for later retirement, because fewer years are spent with serious illness or disability, leaving more quality time with grandchildren, on the golf course or at the bingo hall.
It can also benefit government finances, by reducing pension expenses and costs associated with chronic disease and elderly care, while ensuring workers are able to keep working.
When Otto von Bismarck's Germany became the first nation to offer old-age social security in 1889, the official retirement age was also 70; but at the time, his compatriots were fortunate if they lived past 45. Today, life expectancy for German men and women is around 78 and 83, respectively, meaning men receive a state pension for around 19 years, while for women it is about 22 years, or around 60 per cent longer than in 1980.
The rate at which life expectancy improves has slowed in recent years, and not just because of the Covid-19 pandemic; 65-year-olds now gain nearer one additional year with each passing decade compared with around 1.5 years previously, according to the Organisation for Economic Co-operation and Development (OECD).
A NEWSLETTER FOR YOU
Friday, 2 pm Lifestyle
Our picks of the latest dining, travel and leisure options to treat yourself.
Sign Up
Sign Up
Nevertheless, most of us will live longer than our parents and grandparents. (The UK government's online calculator suggests your 42-year-old columnist will expire at 84, with a one-in-four chance I will reach 93. Fingers crossed.)
While this is obviously good news, it will put even more pressure on pay-as-you-go social security systems, which face a growing imbalance between the number of retirees and employees.
Germany's statutory retirement age is set to increase to 67 by 2031, but its new government has postponed a politically awkward decision on what happens after that. It should consider indexing the retirement age to longer lifespans, as Denmark does, to help avoid a political row about working longer. (Reforms to lift France's retirement age to 64 from 62 led to widespread protests in 2023.)
Denmark introduced a quasi-automatic adjustment mechanism in 2006, and variants of this indexation system have been adopted by several European countries. For Danes, an extra year of life expectancy translates to a full year of additional working time, based on a principle that on average, workers should spend 14.5 years in retirement.
This feels harsh when Portugal, Finland and elsewhere apply a two-thirds ratio, meaning employees leave the workforce eight months later for every year of extra life expectancy, thereby preventing a compression of the proportion of life spent in retirement.
In theory, most of us should be able to work longer because in general, we are healthier than previous generations were at the same stage in life.
Citing survey data from 41 advanced and emerging economies, the International Monetary Fund (IMF) argued in a report in April that, on average, the cognitive abilities of a 70-year old in 2022 are comparable to those of a 53-year old in 2000, while in terms of physical frailty, a 70-year old in 2022 is comparable to a 56-year old two decades ago. So there really is no justification for ageism in the workplace.
But it is not all good news. There is evidence, for example, that recent cohorts have a higher prevalence of chronic diseases such as diabetes, and while we are living much longer, many of those years are spent in ill health.
A study published in December in Jama Network Open found that during the past two decades, the gap between healthspans and total lifespan has widened to 9.6 years, compared with 8.5 years across 183 World Health Organization member countries. The US and UK had two of the largest gaps at 12.4 years and 11.3 years, respectively.
Moreover, the affluent and more educated are ageing better those from more disadvantaged backgrounds. In 2022, the Health Foundation think tank found that 60-year-old women in England from the most deprived decile have roughly the same level of diagnosed morbidity as 76-year-old women from the wealthiest decile; meanwhile, men from the most deprived areas die around a decade earlier than the most affluent.
Deteriorating health is a big reason why people exit the workforce early, potentially exposing them to poverty, and raising the statutory retirement age can be regressive because wealthier people end up drawing a pension for longer than the poor.
Furthermore, telling a construction worker to stay on the scaffolding until 70 clearly is not the same as telling an office worker to keep driving a desk. Setting a pension age that accommodates this heterogeneity is not straightforward, though a combination of disability benefits and retraining can help.
But why not index the retirement age to healthspan rather than lifespan, as the longevity author Andrew J Scott has suggested?
'If we set up a national target for healthy life expectancy, we would see much more focus on reducing inequality,' Scott, who is director of economics at the Ellison Institute of Technology in Oxford, told me via e-mail. 'We have a health system overly focused on disease, which is not the same as keeping people healthy.'
Regrettably, just 1 to 6 per cent of OECD country health expenditures currently goes towards health promotion and prevention, according to the IMF.
Public health campaigns to improve diets should be a priority – US Health and Human Services Secretary Robert F Kennedy Jr's focus on ultra-processed food is encouraging. And as an advocate for strength training – which slows muscle wastage and improves bone health in the elderly – I think governments should fund public gyms or subsidise access, as Singapore does.
It should not be just a privileged few that live longer, healthier lives. While working longer looks unavoidable for many, how fast we age and how long we spend in ill health are adaptable, too. Longer lifespans are great, longer healthspans even better. BLOOMBERG