Raising the retirement age
Sometimes the press misses the big picture by missing small events. Example: Belgium was shut down Oct. 7 by a general strike. Unions didn't want the retirement age lifted from 58 to 60. Yet Belgium, like many rich nations, has little choice. People are living longer and too many will soon be drawing benefits.
In Britain, too, unions threaten a national work stoppage over a plan to raise the retirement age for public-sector workers to 65 from 60.
In America, poll-conscious politicians haven't raised the age for receiving full Social Security in a couple decades. (For workers born in 1960 and later, the age will rise from 65.5 by about two months a year until it reaches 67 in 2027.) Yet the first baby boomers hit 60 this year, and that generation - 78 million strong - can't possibly have their pension and medical costs subsidized by fewer, younger workers.
Governments in wealthier nations need to rethink the whole concept of "retire" and adjust their policies to make it easier for older people to keep working, find work, and receive training. Aging need not mean setting limits on one's agility, alertness, and ability to contribute.
In a little-noticed news item last week, the Organization for Economic Cooperation and Development, the think tank for 30 industrialized nations, warned that world economic growth will decline to 1.7 percent over the next 30 years if older people aren't encouraged or allowed to work. If nothing is done, the OECD stated, the ratio of nonworking retirees to workers will nearly double in those countries by mid-century.
This demographic reality usually draws a simple political response: raise taxes or lower benefits, or both. In Congress, that way of thinking has led to stalemate on revising Social Security. Both political parties need to discuss a retirement age of at least 70 for both Social Security and Medicare for the next generation.Better yet, it should index the age requirement to rising longevity so this issue can be done with.
Americans who turn 65 this year are expected to live four and a half years longer than the typical 65-year-old in 1940. On average, today's Americans spend nearly a third of their life in retirement. And yet three-quarters receive benefits before turning 65. While retirees deserve those benefits, and many are not able to work, the system, indeed the workplace, still needs to change. A Merrill Lynch survey last year found most boomers hope to work in some capacity in retirement.
The OECD asks governments to end the penalties that force people to retire. The IRS, for instance, has proposed new rules that would allow "retired" employees to receive some retirement benefits but still keep doing some work on a payroll.
Many companies know they face a labor shortage or a loss of skilled workers as demographics change. The AARP has a program with many companies to connect older workers with job opportunities and training resources. Such steps are necessary to challenge what is a very recent concept in the history of humanity - retirement - which began in 19th-century Germany with the introduction of old-age government pensions.
Boomers may just be the generation that demands a new term for their later years.•
