France has been engulfed in the worst riots since 1968. Those of us who are old enough to remember those events – and even to have participated in them – are now old enough to retire. The French retirement age is 62 and the government would like to raise it to 64.
But should we retire? Is it time to retire retirement? Retirement was a noble government experiment but perhaps it has outlived its usefulness.
Most workers throughout history never “retired”. They worked until they died (often in the workplace itself). Or they may have spent their final months or years with their families; there were few “aged care” institutions.
The workers who were officially “retired” were mainly members of the military. The UK scheme of Chelsea Pensioners was created in 1692, for example, and today 300 veterans in their distinctive red uniform are a London tourist attraction in themselves.
Things improved for civilians in the 1880s, when the German chancellor (prime minister) Otto Von Bismarck promised all German workers an old age pension when they turned 70. He was not giving much away because most workers died before turning 50.
However, the German idea caught on. One of the earliest pieces of national Australian legislation was the 1908 Act guaranteeing an old age pension to men aged over 65 and women aged over 60 (only four per cent of the population reached 65 years, and so again the government really was not being that generous).
The Club of Rome has estimated that if the German scheme were introduced today workers would need to be aged around 87 to be eligible.
The focus on “70” years may well have come from the Bible. Psalm 90, verse 10 talks about “three score and 10 years”.
Otherwise, there is little logic behind that figure, especially today. There is nothing magical about that figure, or the 60/65 one. Retirement is not age – it is simply a number.
One reason for abolishing retirement is, then, that people are now living longer, healthier lives. A person who retires at 65 and does not die until aged 90, will have 25 years of retirement. By 2050, a quarter of the Australian population will be 65 or older.
People are aging more slowly. They have heathier lifestyles, better healthcare, better nutrition, less or no smoking and drinking, better dentistry, and better skincare (because of sun blockers). They are younger for longer.
Second, the nature of work has changed. The tough, back-breaking work in agriculture and manufacture is being eased by the use of machines.
Both sectors, in employment terms, are declining. Most workers today are in the service sector, such as editing magazines. They have little physical work to do.
Third, western countries cannot afford to have people in retirement for many decades. The original German scheme envisaged (at most) just a few years relying on income from the government.
Many pension schemes are “pay as you go” whereby the currently retired population are financed via current taxpayers. But this is a giant Ponzi scheme because there are increasing numbers of longer-living retirees and fewer taxpayers as the years roll by.
The Australian superannuation guarantee levy is helping to address that problem. But most current superannuation balances will not be large enough to support someone for (say) 25 years in retirement.
Societies are headed towards a “can we afford the elderly?” debate. Baby Boomers (born between 1946 and 1965) have won the lottery of life. They grew up during a booming economy, received a free university education, cheap housing, and there were many well-paid middle-class jobs.
Many of those factors are no longer present for today’s younger workers. For example, Baby Boomers bought cheap housing, held on to it as it increased in value, and have become on paper “millionaires” simply by holding onto their property. It has been an easy way to become wealthy. This is the power of compound interest – people make money while they are asleep.
Finally, retirement may well be a health hazard. Work is often good for a person. Not only does it provide a wage, but it also provides social connection, a challenge to keep the brain ticking over, a sense of purpose, a form of keeping active; in short, a reason to get out of bed in the morning.
From a business point of view, older workers are important to understand older customers. We hear a lot about the need to connect with young people, but older people should not be neglected, especially since they may be wealthy.
To conclude, we need to think through the consequences of an aging, healthier society. Here are two examples,
First, the Australian government has decided to treat 75 as the maximum year for contributing to superannuation. A worker at 75 can no longer be involved in contributing to the superannuation guarantee levy. That age limit should be abolished. Let the worker decide when they want to stop contributing to the scheme.
Second, we need to make Australia’s built environment more suitable for an aging population. I was the national facilitator of the Australian government’s 2006 project “A Community for All Ages – Building the Future”. The project envisaged different parts of the Australian society (government, business and non-governmental organisations) working together to make buildings of all types more age-friendly. Unfortunately, with a later change in government, many of the recommendations languished.
The challenge remains to make sure that the increasing number of older Australians live well. Australians should die as “young” as possible as old as possible.
Dr Keith Suter