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Is 80 the New Retirement?

Experts suggest that the aging of our population is one of our most pressing social issues, registering right on up there in importance with our dwindling oil and water resources.  The European Union declared 2012 the Year of “Active Aging and Intergenerational Solidarity”—but, if anything, the challenges may be even more extreme on this side of the pond.

The National Journal concurs, suggesting that the biggest split facing the U.S. is not political but generational.  Multiple generations now share office space and compete for jobs.  Given that a couple retiring in 2011 (both having earned average wages) accrued $200,000 more in Medicare and Social Security benefits over a lifetime than they paid in taxes to support those programs*, would it be any wonder if intergenerational tensions ran high?  Younger generations, by contrast—many of whom entered the workaday world with mortgage-sized college debts—are saddled with rising Social Security and Medicare costs.

Social Security and Medicare payments accounted for 20% of what the federal government took in in the 70s.  Today, funding for these entitlement programs accounts for a full half of what the government collects through taxes.  30% of middle class workers now believe they’ll need to work into their 80s to retire comfortably–and they’re probably not far off.

While the idea of retiring in your 80s may sound punishing, two trends may serve as saving graces.  As Americans live longer, many with the option are choosing not to retire until later in their careers.  And Americans are starting to take more ownership of their finances in preparation for retirement.

What are your thoughts on how to best handle the aging populations challenge?

*According to the Urban Institute