Q & A
What is the real reason for the government choosing 65 as the retirement age?
Complete Question: As the “full retirement age” as defined by the government creeps up to age 67 (and who knows what it will be for my grandkids) it makes me wonder where the original retirement age of 65 came from. I’ve heard that it had something to do with Germany, but surely America didn’t want to model themselves after the Germans during World War II, right?
Answer: There are rumors that the United States chose 65 as the retirement age because of Germany, but there’s a little more to the story than that. First of all, let me clarify something important – Social Security was established in 1935, which was 4 years before World War II. Other than that, many countries looked at Germany’s social insurance system for the simple reason that they were the first country to adopt such a system (in 1889). A common myth is that the German’s system adopted age 65 as the retirement age because it was designed by Chancellor Otto von Bismarck who was 65 at the time; however, he was actually 74. In addition, Germany’s original retirement age was 70 and it wasn’t until 1916 that the age was lowered to 65.
As for the United States, the Committee on Economic Security (CES) based their decision of age 65 on (1) the common retirement age chosen by private and state-run pension systems; and (2) the age that would maintain funding through modest payroll taxation. Of course, that brings us to today’s increasing retirement age – payroll taxation is not keeping up. In addition, life expectancy is increasing and is certainly longer than it was in the 1930s.