The Distribution of Retirement Time:
Who Really Gets to Retire?
Yes, the average American is retiring earlier and living longer. However, these two facts do not mean that people are spending more time in retirement. Jumping to that conclusion means assuming that longevity is going up faster than the retirement age is decreasing for everyone. We do not know that. Besides, only some people are living longer and only some people are working more. Stunningly, no one has considered that the reason we are living longer is precisely that we are retiring at earlier ages. There is credible evidence that retirement improves health, and evidence that working more would reverse those improvements in longevity.
The amount and distribution of how much time people spend in retirement—I will call this retirement time—are tricky to measure. After measuring accurately enough the distribution of retirement time across the population of the elderly correctly, I was pleasantly surprised. It seems that Americans of all different races and income levels have about the same amount of retirement time. The reason retirement time is the same is because the retirement date is flexible—Americans can start collecting a pension as early as age fifty (in some cases), and mandatory retirement is illegal so workers can stay in the labor market if they want.
Another way to explain the equal distribution of retirement time is that people can retire at different chronological ages so that they can retire at the same real age. Chronological age is measured by how much time has elapsed after your birth; real age takes into account how much time you have left. An eighty-year-old with such a healthy profile that she is predicted to live ten more years is the same real age as a feeble seventy-year-old who only has ten years to live (you will see more about this distinction throughout this chapter). For now, consider this: as we get older, measuring our age is less relevant