Growing old, Stones-style

Image of Gillian Tett

I have attended many impressive concerts over the years. Few of them, however, have been as exhilarating as The Rolling Stones’ “50 & Counting” show, which is now on tour (in London, New Jersey and New York City). Never mind the timeless appeal of their numbers, or their slick and witty staging (songs such as “(I Can’t Get No) Satisfaction” were belted out on a stage shaped like a vast Mick Jagger-esque mouth). What really made me cheer and dance (badly) was the sight of men in their seventh and eighth decades of life wiggling their hips and rocking out.

True, the supernatural Jagger does not look 69: he still exudes extraordinary athleticism and sexual magnetism, dressed in skin-tight black jeans. In contrast, Ronnie Wood’s haggard face showed his 65 years; Keith Richards, 68, and Charlie Watts, 71, both sported shocks of grey hair. Yet while their average age is apparently higher than that of the US Supreme Court judges, the group kept dancing for hours. Not bad for men who are technically old enough to draw a pension in the US and Europe.

Is there a wider message here? Most notably, if “pensioners” can now dance so wildly on stage, might it be time to rethink that whole concept of retirement? It is an intriguing issue, not least given the vicious fight about fiscal reform now under way everywhere from Athens to Washington.

Back in the 1940s – when Jagger was born – the average life expectancy for men in the US (and much of Europe) was about 65 years, while for women it was about 69. These days it has increased by more than a decade, to about 76 and 81 respectively. And the Organisation for Economic Co-operation and Development (OECD) suggests that in the next 50 years it will rise “by more than seven years in developed countries”.

This is good news for older people (even if they are not strumming a guitar). But it is terrible for the public purse. Until recently, most western countries let their workers retire somewhere between the ages of 60 and 65. As pension costs rise, 28 of the 34 countries that are monitored by the OECD are now – finally – in the process of raising this retirement age. However, as the OECD notes: “These increases ... are expected to keep pace with improved life expectancy only in six countries for men and in 10 countries for women.” As a result, pension costs are expected to grow, as the length of that “retirement” life increases.

The OECD concludes from this that more reform is needed. “Governments should ... consider formally linking retirement ages to life expectancy, as in Denmark and Italy,” it argues. And in Washington many would agree. Most notably, the Republicans have suggested (in a host of dense policy documents) reforming the age for retirement and medical benefits.

Some have even spelt out the issues. For example, Chris Christie, New Jersey governor, recently warned: “You are going to have to raise the retirement age for Social Security! Whoa! I just said it and I am still standing here.” Even Lloyd Blankfein, chief executive officer of Goldman Sachs, has jumped into the fray. “Social Security wasn’t devised to be a system that supported you for a 30-year retirement after a 25-year career,” he recently observed, reflecting the view of much of Wall Street. “The retirement age has to be changed.”

But while such calls sound logical, particularly when “pensioners” are jumping around on a stage, there is a crucial rub – or at least there is in the American context. In continental Europe, the life expectancy of wealthy and poor pensioners is not starkly different. However, in the US (and to a slightly lesser extent, the UK) a marked gap has recently opened up between life expectancy for older rich and poor, which reflects rising income inequality.

According to data from the Incidental Economist – also cited by the influential blogger Ezra Klein last week – the life expectancy of the richest half of Americans has risen by six years since 1977. For the poorer half, however, the increase has been a mere 1.3 years. And if you were to compare the top 10 per cent with the bottom 10 per cent, say, the gap would undoubtedly be higher still. As a result some economists, such as Peter Diamond, argue it would be indefensible to raise the retirement age, since it would hurt the poor. Instead, left-leaning economists want to raise revenues from the middle class and the rich through measures such as a rise in payroll taxes.

I suspect that eventually both routes will be needed: namely, the retirement age should rise slightly, but higher taxes on the wealthy should be imposed too. But it is difficult to produce a balanced, “moderate” policy plan when the issue is so emotional. Let’s not forget that behind this wonky debate there is a bitter intergenerational fight. Should today’s “golden oldies” (such as Jagger) share their good fortune with everyone else? Or is that “unfair” on them? Sadly, it is a fight from which nobody will get much satisfaction any time soon.

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