The retirement age must rise with life expectancy. Anything else is a transfer of wealth from the young to the old, which I assume sounds great if one is a boomer who destroyed the golden-egg-laying goose.
However, you’re right about market forces in European salaries.
I too live in europe but I'm not so optimistic about it, given the societal trends it's likely my retirement age will be increased once or twice again before I reach it.
this combined with inflation and the raise in price of specific things will probably means that the received amount won't be enough to live with.
In the US at least, the original retirement age, set in 1935, was 65. The average life expectancy was 60. Today in the US it's 77.8. In France, it's 82.
As populations age into a higher percentage of retirees, the system is forced to cope with more people who are purely consumers, and contribute nothing to the system. In a post-scarcity world, this would not be a problem, but currently with the oldest generations owning the vast majority of wealth and real estate, and with college, housing, and many costs of living having inflated 3-20x since the older generations were younger, it is a problem.
Giving old people money for free when their 10x more valuable houses inflate the market, keeping the younger generation from being able to start families, is a killing blow for population growth and the livelihoods of younger generations.
This is especially bad in Germany where the introduction of the Euro pretty much split the earning population in two.
Around 1990 the average retirement age in Germany was 60 years, retirees also got way more money (they still do) because back then people still earned proper wages and the retirement is based on prior income.
Since the introduction of the Euro real wages in Germany have kept on stagnating while living costs kept rising and live expectancy also increased.
This has lead to the absurd current situation where (old) retirees make up the bulk of the upper-income levels in Germany, while younger generations are not even sure they will be getting any retirement at all down the line, as German government keeps increasing the retirement age (67 years now, estimated target being at least 69 years) while decreasing the amount of retirement money people actually get.
The worst part is that a lot of this is based on the naive assumption that life expectancy is gonna keep on increasing and people can stay "productive for longer", like we are all gonna be able to work till 70+ by 2030. But nobody answers the question that actually matters in that regard: Where and as what are all those people supposed to work?
And why should any businesses hire a 60+-year-old guy vs hiring from a flood of overqualified, eager, and cheaper young folks?
AFAIK, pension age raise is driven almost entirely by demographic collapse of the developed countries. Specifically there are more people are retiring than entering the workforce. After that happens pension funds start bleeding money and something has to give. Pension age raise is a giant hammer, but the alternatives include raising taxes, making healthcare drastically cheaper, or Machiavellian tactics like banning abortions/contraception 20 years prior...
France already has high taxes and amazing work-life balance. I don't know much about state of medical industry to comment. However, if its not completely terrible, then raising the retirement age seems like the only knob that could be turned.
Except pension age is already going up around the world.
I had to stop myself from laughing when I heard an old lady in a restaurant complain about not getting enough money from her pension. Sure, I wish she had more money too but at this rate I'll be retiring 15 years older than she was when she retired.
Oh no, don't promote tech like this until you're retired yourself - THEN you can vote for this kind of tech to make the generation then supporting you and your retirement work longer!
(that's what's happening in Europe with the age of retirement being raised left and right. I mean it's just in e.g. Greece but where I live it's gone up by 2 years because there's a slightly older generation that are now all retiring, and the system is based on growth - that is, a younger generation paying for the retirement of the older one - instead of on saving, which causes the system to collapse unless they make people work longer.
A couple of years ago there was a discussion in Netherland about increasing the retirement age from 65 to 67 because babyboomers were about to retire and the working population that would pay for it would shrink. (Also because people live longer; increasing retirement age is not unreasonable in itself.)
But because increasing retirement age just in front of people who were just about to retire would be too big a shock, it was decided to increase it slowly over a period of years. The end result is that all the babyboomers can still retire at or near 65, but it's the younger generations that have to keep working longer to pay for the boomers' retirement.
In the mean time, the mortgage crisis has undermined pension funds, which in some cases meant everybody had to chip in extra so the babyboomers could retire the way they were originally promised.
I have no idea where this is going, but I'm glad my retirement savings are actually my money rather than part of a fund that can be plundered or mismanaged by others. Dutch retirement funds are among the strongest in the world, but these past couple of years have seriously hurt people's trust in them.
I'm all for solidarity, but the solidarity has been a bit one-sided lately.
Raising the retirement age is probably the only way to keep things going. People used to retire in their 60s and died in their 70s. Now they live up to 90 and more. Simple math tells us that this is not sustainable.
It s very hard for these reforms to pass in europe, to the point where it might be better to just let the pension systems collapse.
Raising the retirement age is not a great strategy, 70 yo people are not as productive and hoard jobs thus increasing unemployment of the most productive, the young. This is massively happening in all of southern europe and is a major reason for economic retardation.
Young people are increasingly aware that they will not get pensions. Old people hold vast amount of wealth in real estate which has become entirely unaffordable even to well-earning young professionals. At some point the collapse of pension funds will meet the need for housing. Hopefully there will be a tradeoff
Retirement age cannot be pushed higher much longer, we already have too many too much old people doing _badly_ their work because they are not sharp enough / willing enough / energic enough to do any better (so destroying any productivity value for that position + not allowing access to those well paying jobs to the new generations).
I am in a country which has the s.k. problem since a decade and since then tried to push retirement age over and over with extremely bad results (one of the higher young unemployment rate in the whole eu area).
Add to this that already now losing your job, especially if low-skilled, in your 50ies it's basically a sentence to never find another one and live under unemployment benefit until you get your small state pension.
For my generation (Born 1985-1995) it is already planned we will have to retire minimum at 74yo in the most optimistic situation. I mean, I don't even see myself capable of doing well my work at 65, and probably no one will want to keep me after 60, doesn't matter how sharp I will be. All supposing I am not gonna get pretty sick around that age, which is highly probable.
My retirement is based on paying ~25% of my gross income into a retirement fund, which is then spent on current retirees, and hoping that in many years, there will be enough people working to be able to pay my retirement.
If you gave europeans those 25% as an extra net pay, there would be a lot more new cars on the road, a bit more savings/investments, and a lot more problems when people get old. "Smart" people would save and invest, and have better "pensions" than they'd have in the current system, and "stupid" people would work until 85yo, and die of hunger.
“The normal retirement age of men will increase in 20 out of 36 OECD countries by an average of 3.5 years based on current legislation. The highest increase is projected for Turkey, from 51 currently to 62 years. Assuming that legislated life expectancy links are applied, also Denmark, from 65 to 74 years, and Estonia, from 63.3 to 71 years, will rapidly raise the retirement age.“
Those EU countries don't need to achieve 7% annual returns because they won't pay as much as 2/3, nor allow retirement as soon as age 55. Their models are much more sustainable.
It's going to get interesting in the US, as an increasing percentage of private sector retirees are scraping by on an average $1K a month whilst public sector retirees are enjoying cruises and taxes are being raised (or services reduced) to fund them.
The French government just rammed through raising the retirement age from 62 to 64. Macron cited the long term demographic and knock on economic risks of not doing it.
In an economically declining country that prioritizes social spending on pensions to the point of crowding out investment in the future, the young might just emigrate.
the link proposed is not not clear to me. Wouldn’t requiring people retire later keep them in jobs near the end of their career, giving them even more money to “push up prices”?
In the past, it was certainly possible to have high living standards economies and relatively low retirement age. I don't think, even if you take longer age into account, that people are such a big spenders that it would be impossible to replicate today.
There is a theory that lot of (especially service and high-pay) jobs are actually bullshit, and detract rather than add social value. So if people retire these jobs sooner, living standards might actually increase for everybody.
However, you’re right about market forces in European salaries.
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