Rising Prosperity Fuels Concerns Over Widening Retirement Disparities
Stockholm, sweden – December 3, 2025 – A growing gap in optimal retirement ages, driven by increasing prosperity, is raising socio-economic concerns as more individuals seek extended working lives, according to economists. The trend, highlighted at a recent seminar, suggests a simple proportional increase in the retirement age may not be the most effective solution for ensuring both adequate pension systems and appropriate support for those unable to continue working.
Traditionally, economic models assumed income and substitution effects from wage growth would balance each other regarding retirement decisions. Though, recent research indicates the income effect – the ability to afford longer periods of retirement – now dominates. This means steady economic growth and rising incomes are leading more people to desire longer retirements, creating a widening disparity in when individuals choose to leave the workforce. “If the spread continues to increase, it will be a concern,” explained John Hassler, professor of economics, who attended the seminar. “It becomes more difficult to manage and construct a pension system that provides both the right incentives and the right insurance for those who suffer from various things that mean they should retire.”
Hassler argues that policy changes should be targeted towards groups where continued employment is most crucial, rather than a blanket increase in retirement age. “It is crucial that we try to direct changes in the incentives towards the groups where it is really important socially and economically that you work more. I am not entirely convinced that we always succeed in this,” he stated.The article was originally published on December 3,2025,at 09:35 and last updated at 13:28.
