When Should People Actually Retire? A Closer Look at Aging Workforces in America and Japan

Retirement planning has become an increasingly complex issue across developed economies. Two major powers—the United States and Japan—face distinctly different demographic and policy challenges that shape when their citizens actually leave the workforce. While superficial comparisons might suggest similarities, the underlying systems reveal fundamentally different approaches to aging populations and financial security.

The American Retirement Puzzle: Earlier Exit, Deeper Concerns

The United States presents a paradoxical situation when it comes to retirement age. According to recent Mass Mutual survey data, Americans are retiring at an average age of 62 in 2024. Interestingly, both those already retired and those preparing for it view 63 as the ideal retirement age—a figure that sits significantly below the official full retirement age.

This gap between actual and ideal reflects widespread anxiety. The Social Security Administration reports a sobering reality: roughly 50% of Americans aged 65 and older depend on these benefits for at least half their household income, while 25% rely on them for 90% or more. Yet here’s where the mathematics becomes troubling—35% of people planning retirement don’t feel adequately prepared, and 34% harbor fears about depleting their savings before death.

The timing decisions people make relate directly to benefit calculations. Those born in 1960 or later face a full retirement age of 67 years old. While waiting until 70 maximizes monthly payouts, the option to claim at 62 creates a powerful incentive to leave work early, despite permanently reduced benefits. This early-claiming phenomenon partly explains why 62 has emerged as the de facto retirement age nationwide.

Adding pressure to this already strained system is Social Security’s looming insolvency. Current projections suggest that without legislative action, the trust fund faces depletion by 2035—at which point it could only cover approximately 75% of scheduled benefits. This threat pushes some Americans toward extended work years out of necessity rather than choice.

Interestingly, a countertrend is emerging: college-educated Americans tend to work longer than their peers, primarily due to superior health outcomes. This suggests that retirement age increasingly correlates with education level and health status, creating new inequalities in access to rest and leisure time.

Japan’s Mandatory System: Flexibility Hiding Complexity

Japan operates under a fundamentally different framework. The country maintains a legally established minimum retirement age of 60, though individual employers retain discretion to set their own mandatory retirement ages—provided they don’t fall below 60. Companies choosing mandatory retirement before 65 must still facilitate continued employment opportunities until that threshold, creating a nuanced middle ground.

The data reveals surprising patterns: approximately 94% of Japanese employers establish a retirement age of 60, with 70% of that group actively enforcing it. Yet the reality on the ground differs substantially. A 2023 survey of over 1,100 Japanese residents aged 60 and above discovered that 66% were actively working in some capacity. Of those continuing to work, 78% fell into the 60-64 age bracket.

The employment arrangements themselves reflect Japan’s employment flexibility. While slightly over half maintained positions with their original employers through “continued-employment” contracts, most transitioned to contract-based roles rather than permanent positions. This arrangement creates a hybrid retirement—workers technically separate from their long-term employers while remaining economically active.

The underlying driver of this phenomenon differs markedly from America. Japan’s working-age population has contracted significantly in recent years, forcing policy discussions around extending pension eligibility ages. Japanese citizens between 20 and 59 contribute to a public pension system but cannot access benefits until 65—making the extended work years a structural necessity rather than optional.

Contrasting Systems, Shared Uncertainties

These two nations illustrate how retirement age emerges not from personal preference but from the intersection of economic necessity, policy design, and demographic realities. Americans face benefit adequacy concerns and the temptation of early claiming. Japanese workers navigate mandatory ages transformed into flexible arrangements through continued employment.

Both systems face pressure from aging populations and shrinking workforces. Yet each addresses this pressure differently—America through anxiety about insufficient benefits, Japan through structural extensions of working life. The average retirement age in each country ultimately reflects not the ideal timing for human rest, but the complex mathematics of modern welfare states struggling to fund growing retiree populations with smaller contributor bases.