Economists said the 20-year phase-in period would give savers time to adjust to the new rules, and said a long lead time had been used in other countries that were faced with similar issues.
"The reality is that we are living for longer and we are working for longer as well," ASB chief economist Nick Tuffley said.
"Changes like these reflect those shifts," he said.
"When you are making changes, particularly when it comes to retirement savings where individual savings take place over a long time, you do need to give people a bit of advance warning," he said.
Government data released with the decision showed that there are at present around 100,000 people working in the 65 to 69 age bracket, compared with just 15,000 in 1997.
Retirement Commissioner Diane Maxwell welcomed the announcement.
She said: "I think where the government has landed is fair. It gives people time to prepare for change and removes any anxiety for those who are getting nearer to retirement.
"Last year, when we reviewed retirement income policies, we worked very hard to signal the need for change, and were clear that it should be at a pace that people could cope with.
"More of us are living longer and there are fewer young people working relative to our retired population. The cost of NZ Super is growing faster than GDP and the time to make decisions about the future is now."
ANZ senior economist Phil Borkin said the political decision to extend the retirement age to 67 was always going to happen at some stage.
"It was just a question of when and how they would go about that change and whether there was a political appetite to do that," Borkin said.
"The decision needed to be made," he said. "It was logical to phase it in (over 20 years) and not to shock people," he said.
Employers and Manufacturers Association chief executive Kim Campbell agreed that 2037 seemed like a long-way off but said people had to be given time to adjust.
The discussion around changes to superannuation was "politically toxic" but ignoring it was irresponsible, he said.
"It would be foolish for everyone to ignore it," Campbell said.
The pension was only "part of the puzzle" around retirement.
"We need to talk about how New Zealanders save, their appetite for debt, the kinds of things they do to prepare themselves for retirement — which includes having a debt free home when they retire — all those public policy issues need to be discussed exactly at the same time [as superannuation]," he said.
BusinessNZ chief executive Kirk Hope said lifting the pension age was "fiscally prudent" and shouldn't have any big implications for the business community.
"We're already thinking about ways that we can as business manage an older workforce," he said.
