Danish employees are expressing concern following the government’s decision to raise the retirement age to 70, the highest in Europe. Currently, residents can access public pensions at 67, but this will gradually increase to 70 by 2040. Reports indicate that many Danes are dissatisfied with this change, especially as Copenhagen approaches a vote in May.
Globally, as life expectancy rises, pension systems face challenges, which has led to decisions to increase retirement ages. The rationale is that a larger working population will support a growing number of retirees and promote reforms aimed at ensuring financial stability. It’s believed this change could enhance productivity and tax income.
Yet, experts point out that this transition could disproportionately affect those in physically demanding roles or who have health issues, making it unlikely for some individuals to postpone retirement.
Changes in the US
Shifting back to the U.S., the full retirement age (FRA) is already set at 67 for individuals born after 1960, and it has been gradually increasing since Congress enacted this legislation in 1983. This change, anticipated for 2025, aims to bolster the Social Security Trust Fund, which provides benefits to over 70 million Americans.
If individuals claim benefits before reaching the FRA, they could face a permanent reduction in their Social Security payments throughout their lives. Retiring at 67 means beneficiaries can receive full benefits, with potentially higher amounts if they delay retirement.
Even with the current increases, a segment of legislators is advocating for further hikes in the retirement age. The Republican Research Committee, which includes 170 GOP members, released a budget proposal in 2024 suggesting modifications to future retirees’ retirement age. However, these proposals have yet to gain traction.
These adjustments are often presented as solutions to the impending social security funding crisis. Predictions suggest that by 2035, funds allocated for benefits, alongside payroll taxes, will be depleted, resulting in reduced benefits unless Congress takes action, potentially through raising revenue or cutting benefits. Options might include increasing payroll taxes or diminishing future benefits.
The Congressional Budget Office estimates that raising the FRA to 70 could resolve about half of the system’s 75-year funding gap.
“While raising the retirement age is part of the response, it’s not a silver bullet,” stated Jeremy Clerc, co-founder and CEO of Assist, mentioning its likely significant fallout for future retirees.
Complications and Consequences
Whether raising the retirement age is the right move to support social security remains a complicated issue. Various worker demographics could face unfair challenges due to this change.
“Not everyone experiences their late sixties in the same way physically, financially, or emotionally,” remarked Krelk. He noted that the effects of this change can be particularly nuanced, where an additional two years might seem manageable for some, yet for others, it could be daunting.
Clerc strongly believes that low-income and blue-collar workers will feel the brunt of these changes. “They tend to live shorter lives and will have fewer years to draw benefits. Moreover, many engage in labor-intensive jobs, which might not allow for extended work,” he pointed out.
Jonathan Price, a senior vice president at a benefits consultancy, echoed these sentiments. He warned of the added strain that delaying retirement could place on those in physically demanding occupations.
“It’s likely that those under 67—forced to retire early—will be particularly impacted by changes to the FRA,” he noted.
Clerc referenced a survey revealing that raising the FRA might slash average lifetime benefits by nearly 20%, emphasizing the difficulty in asking physically demanding workers to remain employed well into their sixties or seventies. “Many of these individuals experience burnout and chronic pain at younger ages,” he added.
Price advised that policy changes could have unintended consequences for the workforce. “If the retirement age is postponed, what might that mean for job roles, promotions, and overall participation in the labor market? It’s crucial that people and organizations prepare for such shifts,” he cautioned.
Public Opinion
Despite persistent advocacy from some lawmakers for a higher retirement age, the majority of Americans seem unconvinced. Recent polls reveal a strong opposition to increasing the FRA. Data from a 2023 survey shows only 8% of respondents support raising the age for those over 67.
Clerc maintained that if any changes are made, they must be approached cautiously. “If we’re suggesting that people work longer, we should carefully consider the implications—all around,” Price agreed.
