In this photo illustration an younger person is helping an old man to look at a file with documents. HEIDELBERG, GERMANY – FEBRUARY 14: on February 14, 2020 in Heidelberg, Germany. (Photo by Ute Grabowsky/Photothek via Getty Images)
Photothek via Getty Images
Germany’s latest pension debate has crossed the Atlantic with an obvious question: if Germany is considering raising its retirement age toward 70, why can’t the United States do the same?
The answer is simple: Germany and the United States are starting from different places.
The German pension reform package is not a straightforward plan to make people work longer. Germany’s pension proposals are responding to population aging, a shrinking workforce, and pressure on a pay-as-you-go pension system. The top line of the German reform is to diversify their Social Security system’s financing. The Germans, unlike the U.S., do not have worker and employer contributions invested in financial assets. The Germans aim for advanced funding to accompany their pay-as-you-go Social Security system and have added a gradual increase in the retirement age tied to life expectancy, eventually moving toward 70 over four decades from now.
Germany is not merely saying “work longer.” It is debating how to diversify funding flows and gradually reduce benefits by raising the retirement age.
In contrast, when the U.S. House of Representatives Republicans propose raising the retirement age to 69, they aim to cut Social Security benefits, according to the Congressional Budget Office, raising the retirement age to 69 would reduce benefits by an average of 13 percent. Unlike Germany’s reformers, the Republicans in the House do not propose to improve American older workers’ health, job quality or bargaining power.
Americans Die Sooner
Start with health. German women’s life expectancy at 65 is considerably higher than in the U.S. – 21.2 years versus 20.7. German men, however, fare slightly worse than their American and European peers. At 65, German men can expect to live another 17.9 years, compared with 18.2 for U.S. men. French men live the longest in the G-7, at nearly 20 years, with Italian men close behind at 19.7. German men are scrutinizing the reform. The German DGB labor confederation rejected the claim that longevity gains make a higher retirement age necessary, calling it a ‘myth designed to scare people.’
The bottom line is that older Americans die much sooner than their peers. At age 65, American women’s remaining life span is about 7% less than that of their peers, and American men’s about 5% less.
Now labor markets. Older workers in Germany are more protected than older workers in the U.S. Germany has far broader collective bargaining coverage than the United States. The OECD/AIAS collective bargaining data for Germany show union density at 14.1% in 2024, but collective bargaining coverage at 49%. The comparable OECD/AIAS data for the United States show union density at 9.9% and collective bargaining coverage at just 11.1% because the U.S. doesn’t have industry bargaining.
That means German workers’ pay and working conditions are influenced by negotiations. American workers, especially in the private sector, have only minimum wages and minimal work protections. American workers have a much lower bargaining floor.
In America, it is physically difficult to work as one ages. According to the Economic Policy Institute’s Monique Morrissey, 50.3% of older workers have physically demanding jobs, 54.2% are exposed to unhealthy or hazardous conditions, and 53.7% have difficult schedules.
The German debate also sits inside a broader labor-supply problem that includes women’s employment. Germany has high female labor-force participation, but much of it is part-time. 47% of German women work part time, compared with a European Union average of 28%, and around 4.3 million women in Germany hold “mini-jobs” that create weak incentives to increase hours because taxes and social contributions rise when earnings cross the threshold.
That, too, is a lesson for the United States. Pension reform is never just pension reform. It is also health care, jobs, and care.
The U.S. Retirement Age Is Already Age 70
The United States already has something close to an age-70 benchmark. Under current Social Security rules, workers born in 1960 or later have a full retirement age of 67, and benefits rise for each year of delayed claiming until age 70. So the Social Security language is confusing. The SSA defines “full retirement age” as being 67 but also that those who wait until age 70 get paid more. Americans take a benefit cut if they retire before they turn 70. Raising Social Security’s definition of “full retirement age” to 70 would, according to the Center on Budget and Policy Priorities, cut American average lifetime benefits for new retirees by nearly 20%.
Germany’s retirement age debate should not become a lazy argument for cutting American Social Security. Before asking Americans to work longer, policymakers should first confront the question German leaders cannot avoid, because German workers have a stronger voice: whether the U.S. economy actually allows ordinary people to work longer without sacrificing their health, dignity, and retirement security.
