1. John B Shoven Trione Director of SIEPR Adjusting Institutions for Longer Lifetimes Working Longer

2. Living Longer – It is a Fact The Probability of Future Birthdays for 65-Year Olds 50% Chance of Reaching 77.5 20% Chance of Reaching 85 8.8% @ 90 Dwight Eisenhower and Groucho Marx were 65 in 1955 %

3. Living Longer – It is a Fact The Probability of Future Birthdays for 65-Year Olds 75% Chance of 77.5 30% Chance of 90 8.8% @ 90 60% increase e.g. Bruce Springsteen %

4. Living Longer – It is a Fact The Probabilities of Future Birthdays Meryl Streep turns 65 in 2014 Agatha Christie turned 65 in 1955 %

5. Are These Four People Really the Same Age?

6. Retirement Lengths for Couples

7. A Few Important Facts Average retirement age is 64 for men, 62 for women At those ages, people need to prepare for at least 30-year retirements At those ages, the survivor of a couple outlives their spouse by an average of 11 years YOU CAN’T FINANCE 30-YEAR RETIREMENTS WITH 40-YEAR CAREERS!

8. The Consequences of Trying to Finance 30- year Retirements with 40-Year Careers Vastly underfunded state and local pension funds Social Security Trust Fund becomes exhausted in 2033, followed by a roughly 25% cut in benefits Fewer workers relative to retirees Lower standard of living for retired workers

9. What Can We Do About It? The easiest solution is to work longer For instance, 48-year careers and 22-year retirements Today’s Stanford undergraduates probably will need to work until at least 70

10. Hidden Early Retirement Incentives Need to be Eliminated - I Social Security turns into a pure tax on work soon after 35 years of work Introduce “Paid Up Workers” = People who have already worked 40 years. Paid Up workers would not face either the employer and the employee payroll tax for Social Security and Medicare This would remove a 15.3% wedge between employer’s cost and employee’s take home pay

11. Hidden Early Retirement Incentives Need to be Eliminated - II Medicare could be changed from Medicare as a Secondary Payer (MSP) to Medicare as a Primary Payer (MPP) Today, people 65+ get Medicare unless they work. If they work, then the employer sponsored health plan must include them. MPP would mean that those 65 and over would be covered by Medicare whether they work or not

12. Simply Change the Terminology of Social Security – Change Full Retirement Age to 70 Benefits at Official Full Retirement Age Possible New Definition of Benefits at “Full Retirement Age” Why Not Have the Full Retirement Age Correspond to the Maximum Monthly Benefit?

13. We Need To Change Labor Market Institutions to Reflect Longer Lifetimes Change Social Security – Paid Up Change Medicare – MPP Change the “Full Retirement Age” Facilitate Part Time Opportunities for Senior Workers Retrain workers in their mid-career Look at how Japanese labor markets work

14. Only Economists Could Turn Living Longer Into a Problem!