A healthy 25-year-old can now expect to live close to 100 years. Assuming the standard retirement age of 65, that person is implicitly expecting to spend more than three decades -- about a third of his or her life -- without earned income.

Is that reasonable?

Given low levels of personal savings and underfunded private pensions, I think the answer is no. But that doesn't make the problem any easier. For physically demanding jobs, working into your 70s and beyond just isn't an option.

So what's the answer?

Two weeks ago I asked someone who has more experience with retirement finances than nearly anyone: Joseph Dear, chief investment officer of CalPERS, the largest pension fund in the nation with nearly a quarter-trillion dollars under management. Here's what he had to say (transcript follows):

Morgan Housel: A healthy 25-year-old female today can expect to live close to the age of 100, so if she's planning on retiring at 62, she's planning on spending more than a third of her life in retirement. Given those types of statistics, is 65 or 62 still a reasonable age to retire or does it need to go up considerably higher?

Joseph Dear: Well we've made a decision in the 1980s to move the Social Security retirement age from 65 to 60, (unclear) as they hit that. I think that's the important part of the policy debate. As individuals or a society, you have to decide what's reasonable. As individuals, if we save enough, then we can retire.

Some of us are fortunate to have jobs that are incredibly challenging and rewarding and I don't want to retire. I like what I do. This is fun. I like going to work. I'm not sure I'd be good at retirement. For other people though, particularly those whose work is physical, there's a limit and I think we need to recognize that in terms of how we determine an appropriate retirement age.

Typically we recognize younger retirement ages for public safety employees, for police and firefighters. Some people may complain that that's because they're so highly esteemed that they get an extra privilege of early retirement; others may say, You know, I want somebody who's coming to my house to put out the fire to be really fit and to be capable of doing that. so we may need to look more broadly about what's an appropriate age, given what somebody's career is or maybe we need to get better at transitioning people. There are a lot of elements to that, but it should be a legitimate subject of debate about what's appropriate, and there having a picture of the true cost of retirement should help get people focused.

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