The New Forced Retirement Age: 55?

Right now, the average retirement age is just under 65 for US men and just under 63 for women, according to the Center for Retirement Research at Boston College. But a confluence of events may be forcing considerably younger folks into retirement—as early as age 55.

New government stats show that for workers between the ages of 55 and 64, the average time for being unemployed is almost 26 weeks—nearly seven weeks longer than it is for 25- to 34-year-olds. For men in that older age group, it’s even longer: 33 weeks, or more than eight months. Even among older workers who do have jobs, there’s a growing sense that there won’t be another opportunity after their current one. “You hear people who say, ‘I want this to be my last stop,’” says Andrea Wolf, a senior client partner in Korn Ferry’s Consumer and Consumer Health practices. “It could very well be now.”

To be sure, a vast majority of Americans can’t stop working in their mid-fifties, or would face a hard struggle if they did, says Ron Seifert, leader of Korn Ferry’s North America Workforce Reward and Benefits business. Many don’t have enough money to care for their kids (or in some cases, aged parents), let alone for their own retirements. “The cost of health insurance alone could wipe out a people’s savings,” Seifert says. Rather than retire, many recalibrate their expectations—they take a lower-paying job or shift to a new area of work.

But the extended waiting periods for the middle-aged set suggest that the current workplace environment is much more blocked off than it used to be. While firing people because of their age is illegal in the US, workforce reorganizations at many large corporations have had a considerable impact on older workers. The ranks of management, along with roles like vice president, director, and the like, are often filled by people 50 or older. In a push to make their organizations move faster and be more productive, corporate executives have wiped out those management layers (for instance, one large bank aimed to cut its own management layers from 13 to 5).

Then there’s the hiring side. To be sure, some firms, particularly manufacturers, are actively seeking out older workers with significant experience in the field. However, other companies perceive older workers as less willing to learn new skills, less able, or less ambitious. Wolf says companies often want to know how long an older job candidate realistically wants to keep working—not a question candidates in their 30s or 40s are typically asked.

AI is rapidly changing many types of roles, and some firms—rightly or wrongly—believe that younger workers are more willing to embrace those changes. As AI transforms those roles, some older employees find that their deep experience is no longer particularly valuable. “What if that person is a subject-matter expert and doesn’t have depth of skill set in something else?” says Dennis Deans, Korn Ferry’s vice president of global human resources. Their salary demands might also be a factor; the median weekly earnings for workers age 55 to 64 are 15% higher than for those under age 35.  But these numbers may come down as middle-aged people who are unemployed look for work. Studies show that older workers who do find new jobs take an 11% wage cut, on average. The pay cut was 15% for men and 7% for women. 

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