Everything in society — housing, health care, workplaces, inflation, even the way urban planners design city streets — will be affected by the sheer volume of Americans turning 65 this year, and in the years to come.
More than 4.1 million people are expected to retire this year, and that number will continue through 2027, according to the Lifetime Income Alliance's Retirement Income Institute, which tracks the “peak 65 area.”
This year will see the largest number of Americans celebrate their 65th birthday, which the organization refers to as retirement age. There is no set retirement age in the United States, but age 65 has historically been considered the norm (and for many Americans the full retirement age for purposes of claiming Social Security).
These soon-to-be 65-year-olds may have plans for their upcoming birthdays, but many of them have not planned enough for their retirement, experts said.
“The number of 65-year-olds may be peaking, but we are far from the peak 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 thing, a sign of scientific progress — but when it comes to preparing for retirement, “we have stormy weather ahead of us,” he said.
Nearby retirees simply aren't ready. About half of women ages 55 to 66 have no retirement savings, compared to 46% of men, according to a 2022 survey by the U.S. Census Bureau. Employers have moved away from retirement plans to defined-contribution plans, such as 401(k). The plan, which puts the burden of saving for the future on workers themselves — if they have access to such an account at all.
Older Americans aren't the only ones who will face problems if the situation doesn't change, according to Jason Fichtner, executive director of the Retirement Income Institute at the Alliance for Lifetime Income. Future generations will also be negatively affected.
In the short term, a lack of financial security puts pressure on how people pay for housing and health care in retirement.
In the long term, relying more on local, state, and federal governments to help support a senior community without adequate funds could mean higher taxes, affecting the ability of younger generations to pay for necessities, or more borrowing, which could lead to higher Interest rates, and thus higher expenses when buying homes and cars.
It could also lead to more adult children needing the support of their aging parents, slowing down this generation's ability to save for big life expenses like college tuition, homes, and their retirement.
“This affects everything,” Fichtner said.
There are some aspects of society that directly affect older Americans that will come under pressure from this demographic bubble. An example is Social Security, which serves as a major source of income for retirees in the United States but is currently facing bankruptcy. The trust funds that support Social Security are expected to run out of money in the next 10 years, at which point beneficiaries could see a 20% cut in benefits. These bleak forecasts don't take into account the large influx of retirees who are starting to claim benefits this year or the coming years.
Legislative issues aside, the program was not intended to meet most Americans' financial needs — even though for many retirees, it is their only source of income. “Social Security is insufficient to fund the longer lives people are likely to live,” Irving said.
Health care is a major expense for Americans, especially seniors. Although people may live longer, they may face the need to manage chronic conditions or plan for long-term care. The need for long-term care will be passed on to younger generations, such as relatives who may have to care for elderly loved ones.
The first way to combat these problems would be to save more, Fichtner said. Individuals must contribute to retirement plans and elect automatic escalation when available, which will automatically increase contributions to retirement plans. The workforce should continue to automatically enroll employees in these plans as well, he said. As retirement approaches, near-retirees need to get serious about what 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 to change perspective. “Even though life expectancy is now twice what it was, the standards haven't changed,” said Ken Stern, founder and president of the Longevity Project, an organization that focuses on research on life expectancy and aging concerns. “We are taking extra years out of life and pushing them into old age. We still think those years are years of decline. Instead, society needs to 'rethink' the 60s and beyond as an opportunity to stay productive. What people can do,” he said. In those additional years it changes radically.”
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. Aging isn't what it used to be, Stern said. “This is a really big change in the way we live that we haven't addressed.”
