Working beyond 65 can be good. Is it right?

We're all living longer these days. So does it make sense that we still retire at 65?

Raising the retirement age would involve some sacrifices, requiring people to work longer in order to receive their full benefits from government programs for retirees. But it would also help shore up America's shaky finances.

If the eligibility age for Medicare were gradually increased from 65 to 67, for example, annual Medicare spending would decline by 5 percent, according to a recent report by the nonpartisan Congressional Budget Office (CBO). If the eligibility age for full Social Security benefits gradually rose to 70 (from its current 65 to 67 depending on birth year), Social Security outlays would ultimately fall by 13 percent.

Not only would a higher retirement age reduce budget deficits, the CBO says, it would encourage people to work longer careers, increasing the economy's total labor supply and income.

Of course, budget math doesn't measure social well-being very well. Would raising the retirement age really benefit Americans' own bottom line?

I have my own take on the issue: This is the first year my dad will not be going to work every weekday, and he's turning 80 this year! He chose to work until now not because he needed the money, but because he wanted to keep his job. For my dad, 80 is the new 65.

As a chemistry professor, a profession that is much more mental than physical, he found it possible to remain productive at an older age. It's also likely that staying on the job keeps a person "young."

I, too, have a full-time job that is much more mental than physical, and I plan to work until well past today's normal retirement age. People like me and my dad might actually keep working, even if there were no economic benefits, because we love our jobs.

For others, however, working is physically strenuous, and so working beyond one's mid-60s is not so easy, not so enjoyable, and perhaps not even safe. For workers with those kinds of jobs, increasing the eligibility ages for Medicare and Social Security could more likely result in lower well-being by reducing incomes and physical health.

Is it fair to raise the retirement age and in effect cut benefits for this group even if it helps other Americans stay active and helps cut the deficit?

The CBO acknowledges this dilemma. Its report suggests that savings from a higher eligibility age for Medicare and Social Security could be used to strengthen the safety-net features of both programs, which serve a "social insurance" role. That could make each program more progressive at both ends of the income distribution. Those less fortunate would receive more benefits and those more fortunate would get fewer.

Just as with any federal budget issue, this is a hard choice. If lawmakers are going to cut spending and deficits, they will have to cut overall benefits on average. There's no way around that.

But cutting benefits for those who can afford to work longer, both financially and physically, can spare – and perhaps even strengthen – the benefits for those who cannot easily work longer.

And those fortunate enough to be the ones who can "afford it," like me and my dad, may hardly be upset about this common-sense policy change. That's because we are also the ones most likely to choose to work longer for reasons that have little to do with money.

– Diane Lim Rogers is chief economist of The Concord Coalition, a nonpartisan group advocating fiscal responsibility.