Innovation Leadership Network

Here’s an interesting question:

Why is the Retirement Age 65 in most developed countries?

I’ll give you a second to think about it. Or google it.

Here’s a hint: the retirement age of 65 was first selected in 1880.

Here’s the answer: the retirement age was set at 65 because when it was first introduced by Otto von Bismarck, hardly anyone lived that long. Here’s a quick rundown on that:

The age of 65 was originally selected as the time for retirement by the “Iron Chancellor,” Otto von Bismark of Germany, when he introduced a social security system to appeal to the German working class and combat the power of the Socialist Party in Germany during the late 1800s. Somewhat cynically, Bismark knew that the program would cost little because the average German worker never reached 65, and many of those who did lived only a few years beyond that age. When the United States finally passed a social security law in 1935 (more than 55 years after the conservative German chancellor introduced it in Germany), the average life expectancy in America was only 61.7 years.

I’ve asked this question in classes recently, and most people choose an answer that is something like ‘because by the time we reach 65 years, we’re ready for a break.’ But the fact that most of us can now think about being retired for 15 years or so is completely an accident. The original idea is that we retired at 65 because no one was supposed to live past that age.

What changed?

Innovation, and lots of it.

There has been technological innovation, like x-rays and PET scans.

There has been a range of medical inventions that have been turned into product innovations, like penicillin, chemotherapy and vaccinations.

There have been process innovations – possibly the biggest medical invention since Bismarck’s time has been germ theory, which has led to radical process innovations like hand washing and sterilization.

There have been service innovations, like the provision of universal health care in, well, most developed and developing countries.

Basically, all of the medical services, procedures, medicines and routines that keep us alive longer have been invented since the retirement age was set at 65 years of age.

The simple fact of the matter is that the only reason we can expect to have a retirement is innovation. Remember that the next time someone tells you that innovation is just a buzzword that doesn’t mean anything.

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This post was written by Tim.