From “The New 65“:
Calculating backward, [Kenneth] Manton [of Duke’s Center for Demographic Studies] deduced that at age 65, active-life expectancy–the average number of years a person could expect to live free of chronic functional impairment–was 8.8 years in 1935, 11.8 years in 1982, and 13.9 years in 1999. Based on the trend line, he projects that by 2015, active life expectancy will be 17 years. In short, if you were designing a system in 1999 for people who could expect as many active years as a 65-year-old person could expect in 1935, you’d set the retirement age at 70. And by 2015, you’d raise it to 73.
[…]
How much money would a higher retirement age save? According to the Congressional Budget Office, if the ascent to age 67 were accelerated and completed by 2016, and if the retirement age kept rising two months a year until it hit age 70 in 2037, and if the rate of increase then slowed to one month every two years, Social Security outlays in 2050 would decline by 12 percent. A fully adjusted retirement age–one that kept pace with biology instead of lagging 40 years behind it, as the CBO’s scenario does–would generate an even bigger surplus. By one rule of thumb, every year of recipient eligibility consumes about 7 percent of Social Security’s financial commitments. Compared to the currently assumed retirement age of 67, an increase to age 73 could cut the government’s obligations by as much as 40 percent. Either way, the projected Social Security deficit would disappear–and with it, the Democratic objection to personal retirement accounts, which could be funded out of the new payroll tax surplus.
It seems like common sense, doesn’t it? But I bet we’ll hear a lot of objections like “I don’t want to retire only when I’m unable to work, I want to retire early enough that I can go on world vacations.”