[Quinny]

Was thinking of posting question in UK thread, but think it warrants wider discussion. To put into context. There seems to be a general trend towards raising retirement age across the Western world.
Raises what should be IMHO an obvious & simple question.

Why not lower retirement age and employ the unemployed youth?

[vision-master]

Was thinking of posting question in UK thread, but think it warrants wider discussion. To put into context. There seems to be a general trend towards raising retirement age across the Western world.
Raises what should be IMHO an obvious & simple question.

Why not lower retirement age and employ the unemployed youth?

Here in the USA, pensions are mostly a thing of the past. Thank gawd I'm already out to pasture.

[Newfie]

Was thinking of posting question in UK thread, but think it warrants wider discussion. To put into context. There seems to be a general trend towards raising retirement age across the Western world.
Raises what should be IMHO an obvious & simple question.

Why not lower retirement age and employ the unemployed youth?

Now there you go thinking logically!

I've had the same question. As you said, seems obvious and simple.

[SeaGypsy]

Hi Quinny,
in Oz aged pension just got bumped to 70.
Stupid thing is already if you are over 50 and get laid off for more than a few months, likely you will wait on the dole- very few areas employ 'new' seniors.

The mandatory superannuation system here is already turning out to be inadequate, most people end up on baseline aged pension within 2 years of retirement- of those very few who stay employed right up to current minimum of 63F/ 65M. People used to having a reasonable wage coming in, struggle to get by on 1/3rd of what they used to earn. It's a huge adjustment many cope very poorly with.

So runs the basic argument for increased mandatory savings and lifting pension age.

The fact businesses don't care and can't be forced to hire from this group tends to fly over the top of pollies heads.

Better to start educating people on how to live well on less.

To my eyes, the oldies coping best, really happy in their gray years, are all part of some kind of what's termed 'alternative' lifestyle movement. We have a big scene here of oldies who have either sold up, given away or rented out whatever property they had in their former life and taken to the road- RV's, busses, caravans full of 'Grey Nomads' wander the best bits of Australia according to the season, year round. The areas which were popular in the 1960's and 70's as 'hippie havens' are becoming massive open air aged and retirement homes. People are teaming up and buying hobby farms, sharing costs, at least attempting to go off grid; many of these are in their 60's and beyond. Many start off as nomads before finding themselves in a community and wanting to call it home. People are buying big comfortable bridgedeck catamarans and spending years drifting up and down the Great Barrier Reef.

The Boomers are going to re-landscape aging, aged care, aged economics, aged ethics, aged education and palliative care- I'm just about to start a degree in nursing after several years experience as a support worker- getting ready for the massive changes about to come in this sector with the new National Disability Insurance Scheme.- The Boomers have their mark all over this- the biggest change in disability funding in our history. The 2 biggest changes involve Client preference for carer selection, (until now Agencies dictate 'who' actually works with clients) and Respite Guarantee- where aged and disabled full time family carers will automatically qualify for fully funded respite care for 6 full weeks a year. Interesting times in aged care.

[Shaved Monkey]

They have raised the retirement age to 67 and talking of making it 70 in Australia.
Depending on when you are born
I have to wait till 67 (and cant access my super until Im 58)
My mum retired at 60 and my dad retired at 65
Both got retrenched a few years earlier so went straight on the unemployment benefits until they reached retirement age.
Back then it was the same amount of money so only the name changed as you hit the legal age requirement.
Now days its about $100 less a week so raising the retirement age just keeps people on the dole at $100 less for a few more years until they get their pensions.
Meanwhile we have the superannuation industry telling us how many millions we need to retire comfortably.
Its all designed to scare people into working till they die or demoralising them by making them struggle on the dole, when there is no work for old people or young people.

[Loki]

The immediate problem of how to pay for the Boomers' retirement / old age infirmity trumps concerns about the long-term prospects of subsequent generations. Simple as that. Raise the retirement age high enough and hopefully enough folks will die before you have to pay for their golf memberships and hip replacements---that's the rationale. How this affects the employment of younger folks, apparently, does not factor, it's squishy, hard to quantify. But actuarial tables do not lie.

As a Gen Xer I don't really blame the Boomers for this, it's primarily a structural problem, but I can't help but feel there's an element of “throwing the next generation under the bus.” When I was in my 20s I regularly heard about how the Boomers were just about to retire en masse, opening up great career opportunities. I'm still waiting on this one. A dream deferred is a dream denied and all that

[Surf]

Pensions is are becoming a big issue for local,state, and the US government. San Jose California police department is currently spending about 10% of the yearly budget paying retired police officers. Many people are aware of Detroit's problems. However most people are not aware of the unfunded liability of the federal government:

the federal government last year made more than a half-trillion dollars in future commitments, valued in 2010 dollars that will cost far more to pay in coming decades. Added last year:
•$107 billion in retirement benefits accumulated by current workers.
•$106 billion in new benefits granted to veterans.
•More than $300 billion in the snowballing expense of previous retirement promises that have no source of funding.

And to top it off

In all, the government committed more money to the 10 million former public servants last year than the $690 billion it paid to 54 million Social Security beneficiaries.

Source: http://usatoday30.usatoday.com/news/washington/story/2011-10-11/federal-retirement-pension-benefits/50592474/1

Most US states are having the same problem:

In five states, State Budget Solutions calculates pension liabilities represent more than 40 percent of the entire state economy. In two states — Ohio and Mississippi — the pension costs are equal to more than half the state’s gross production.

On a per-capita basis, it’s equally worrisome. There are five states where the unfunded pension liability would represent a per-capita cost of more than $20,000, with Alaska leading the way at more than $32,000 per person.

Even Tennessee, on the low end of spectrum, would have to ask each and every resident to pay $5,676 to cover the full cost of its state pension liabilities.

Many states are struggling to find the political will to deal with the tsunami of pension costs poised to wreck budgets for decades to come.

In Illinois, where the state is dealing with the nation’s highest official unfunded liability of $100 billion – State Budget Solutions says it’s really more like $287 billion – Gov. Pat Quinn made an effort at reform this year.

Many states are struggling to find the political will to deal with the tsunami of pension costs poised to wreck budgets for decades to come.

Source: http://reason.com/archives/2013/09/06/taxpayers-on-the-hook-for-trillions-in-u

The more I look into it , I am finding that it is a global issue. Many country governments have the same problem, including Greece. Most governments offer pensions to their employees. Most private companies have stopped offering pensions.

[WildRose]

A relative of mine (who worked in insurance all his life, now retired) told me a few days ago that he's heard the Canadian government is considering changing the current old age pensions so that the yearly amount allotted to each person after retirement would be on a sliding scale in line with the economic health of the country. The way he explained it was that a person would have a baseline pension, say $26,000, and in a good year it may go up to 28 or 30,000 but if the economy was in a real slump, it could decrease to 18 or 20,000. I didn't ask him what his source was (will have to do so next time we talk), but my thinking is that decreasing allotments like that would further erode the economy as no expendable income equals more hurting/failing businesses.

I think the current percentage of the Canadian population that has a companypension is around 11%. And the number of people who have no retirement savings at all is staggering.

[westexas]

The GELM (Government Export Land Model*)

Let's think of local and state (provincial), and for that matter, national governments as being similar to oil exporting countries, in that they consume a percentage of tax revenues and net debt infusions, in order to pay current benefits to employees and operating expenses and to pay current and future retirement/health benefits.

And let's just really focus on current and future retirement benefits.

As Michael Lewis noted in his recent book, "Boomerang," a lot of local governments, especially in California, are on track to consist of little more than a small staff that collects taxes and forwards virtually all tax revenue to retirees. And of course, most public pension systems are assuming a (highly unrealistic) estimate of 7% to 8% on future annual returns. Of course, the lower the actual investment return, the larger the unfunded pension obligation.

In any case, if we assume flat to declining tax revenue, combined with rising retirement obligations (especially as investment returns continue to disappoint), it seems to me that the net result would be an accelerating rate of decline in services provided to the taxpayers, perhaps even as governments try (probably) unsuccessfully to materially raise tax revenue, by raising tax rates.

From an Amazon review of "Boomerang"

Quoting Lewis quote UCLA neuroscientist Peter Whybrow in the book's last chapter (on California's financial problems, not European countries), Lewis writes, "'Human beings are wandering around with brains that are fabulously limited. We've got the core of the average lizard.' Wrapped around this reptilian core is a mammalian layer (associated with maternal concern and social interaction), and around that is wrapped a third layer, which enables feats of memory and the capacity for abstract thought. 'The only problem is our passions are still driven by the lizard core.' Even a person on a diet who sensibly avoids coming face-to-face with a piece of chocolate cake will find it hard to control himself if the chocolate cake somehow finds him. Every pastry chef in America understands this, and now nueroscience does, too. 'In that moment the value of eating the chocolate cake exceeds the value of the diet. We cannot think down the road when we are faced with the chocolate cake.' ... Everywhere you turn you see Americans sacrifice their long-term interests for a short-term reward."

Detroit aftershocks will be staggering
Leaders across the country cannot continue as they have, says Meredith Whitney

http://www.ft.com/intl/cms/s/0/34abcabc-f389-11e2-942f-00144feabdc0.html#comment-4983902

As jarring as the reality may be to accept, Detroit’s decision last week to declare bankruptcy should not be regarded as a one-off in the US municipal market – which is what the bond-peddlers are now telling their clients. The aftershocks of the largest municipal bankruptcy in US history will be staggering, and Detroit will set important precedents. Municipal bankruptcies have historically been rare for a number of reasons – including the states’ determination to preserve their credit ratings, their access to cheap funding and the stigma of bankruptcy. But, these days, things are very different in the world of municipal finance.

At the root of the problem is the incentive system that elected officials used to face. For decades, across the US, local leaders ran up tabs for future taxpayers; they promised pensions and other benefits for public employees that have strong legal protection. That has been a great source of patronage for elected officials: they can promise all sorts of future perks to loyal supporters (state and local workers) with very little accountability on the delivery of those promises.

Today, we are left with the legacies of this waste. The bill for promises past is now so large for some cities and towns that it is crowding out money for the most basic of services – in the case of Detroit, it could not even afford to run its traffic lights. Across many American cities, cuts to basic social services have already been so deep that they have made the communities unpleasant places.

*Given an ongoing production decline in a net oil exporting country, unless they cut their oil consumption at the same rate as, or at a faster rate than, the production decline rate, the resulting net export decline rate will exceed the production decline rate and the net export decline rate will accelerate with time.

[ROCKMAN]

wt - Along those lines just the other day I heard an interesting story on NPR about CA pensions. Turns out for years now the state has been borrowing money from the fed govt to pay pensions. They now owe the feds just shy of $10 billion. And it isn't a free loan: the state has paid the govt over $800 million in interest in just the last 3 years. So here's the next question: can CA default on that loan and stick all the other tax payers with the bill? Also makes me wonder how many other states are funding some of their overhead with fed loans.

[John_A]

Why not lower retirement age and employ the unemployed youth?

Unemployed youth have been raised during a time of largess and ease, and few of them are capable of surviving in a modern environment more akin to the recessionary and stagflation periods of the 70's and 80's. Said times teaching that competition matters, showing up for work matters, knowing ones job matters, and texting half the day on a phone, updating ones facebook page and falling asleep during company meetings are not examples of behavior companies are willing to pay for.

[Pops]

Like many things that have happened as a result of moving to cities, we've privatized the "profit" and socialized the "cost" of the end of our life cycle. In this case, individuals benefit from their parents' efforts in giving them a proper upbringing but then shirk the responsibility of taking care of their parents in their later years, opting to have the government assume responsibility. A couple of generations ago, even in the most "advanced" economies, multi-generational households were the norm, I think they are becoming less and less so. This is kind of a sensitive spot for us as our kids and grandkids are spread out and we don't get to see them as much as we'd like.


Way back I read "The Three Boxes Of Life", sort of a self-help book the subject of which was how silly it is to "box" yourself into the typical Learn/Work/Retire path and I've tried to live outside of those boxes. To some extent I've been successful, when my kids were little I kept my nose to the grindstone but in my early thirties I gave up the regular job. I've worked enough to stay ahead but mostly on my own terms, fortunately I was talented enough to do what I liked to do. But I worked as much as required to do the things I want to do. Of course not choosing the college/career/couch path means not "getting ahead" by the traditional benchmarks, I have no degrees, no company retirement coming and no plans to "retire" as in sit on the couch and watch Oprah till I croak.

What was the question? LOL

Oh, yeah, raising retirement age. I think folks should work as long as they need to, if life expectancy increases then I guess the need for income increases either from work or savings. It would be nice if they have kids they can spend their last days with and who could help them out. Having said that, I also think some kind of socialized old age insurance is a good thing for the folks who can no longer work and weren't able to save enough and whose kids are too busy to help. Notice I said "insurance." To me that means means paying "premiums" along the way and receiving benefits only if there is a need – sorta like you get a payout from your fire insurance only if your house burns down.

[ROCKMAN]

John - I don't like joining you to dis our youth but it is true: good parents try to give their kids a better life than they had. But the downside is as you describe: if one has never had to suffer through tough times they may lack the skills/temperament to do so. That doesn’t mean they can’t learn to cope…just won’t be easy for many. I don’t force my 13 you daughter to do without. OTOH I constantly try to impress upon her where it all comes from and that there’s no guarantees. Several years ago I asked her if she knew who was going to provide her with a secure future. She said mom and dad. Got a surprised look on her face when I said no…it was going to be her. She got it right away: we do what we can to prepare her but in the end it’s all up to her.

I’m sure she ‘ll do OK...I’ve trained her to ‘be a good marine”. LOL.

[FarQ3]

I'm a 48yo Australian and I'm concerned as by the time I retire there definitely will not be an aged pension. There will be euthanasia, probably voluntary in my time but this may not be the case when my children get old.

Euthanasia, seems like a good idea for those poor sick souls that want to end their misery but there may be a far more industrial approach to aged care euthanasia in the not too distant future.

Cheapest ULP available today in Perth Western Australia is $1.39/litre, this has been about the average here for quite a while. WA is a huge place, a pension just doesn't cut it.

[vision-master]

Euthanasia, eh?

Why not just smother your aging parents with a pillow and put em out of their misery?

[Timo]

John - I don't like joining you to dis our youth but it is true: good parents try to give their kids a better life than they had. But the downside is as you describe: if one has never had to suffer through tough times they may lack the skills/temperament to do so. That doesn’t mean they can’t learn to cope…just won’t be easy for many. I don’t force my 13 you daughter to do without. OTOH I constantly try to impress upon her where it all comes from and that there’s no guarantees. Several years ago I asked her if she knew who was going to provide her with a secure future. She said mom and dad. Got a surprised look on her face when I said no…it was going to be her. She got it right away: we do what we can to prepare her but in the end it’s all up to her.

I’m sure she ‘ll do OK...I’ve trained her to ‘be a good marine”. LOL.

Sadly, i feel you're in the minority of parents of 13 year olds, these days. Good for you, and your daughter, but in the bigger scope of the world, i'm afraid John's take on youth is largely more accurate. That said, i don't have any kids of my own, so i could be full of sh*t, BUT, whenever i see teenagers and younger rug rats today, their minds are all lost in their cell phones, texting their friends, following tweets, laughing to themselves instead of interacting with actual people. On the plus side, millenials will be the demise of the shopping mall. No need to go anywhere to socialize with anyone. Just reach into your pocket and text from the coffee shop, or their bedroom. They don't have the basic skills necessary to have a real job, just for spending money in high school. That's why i'm actively building up my retirement now, with plans to emmigrate to a place where the cost of living is much, much cheaper when i'm financially able and reach retirement age. My aim is to make do without social security and my pension because i honestly don't expect these funds to exist in another 15 years.

[yellowcanoe]

I would agree that today's youth are ill equipped to enter the real world. A big part of that is due to parents being too protective and not giving their children enough responsibility. Then when the child completes their education they are somehow expected to manage on their own. However this is a temporary situation -- most young people are going to decide that they do want to be financially successful and that will drive them to be more focused on their work and to work harder.

Imagine what people said about the upcoming baby boomer generation in the late 60's. You had the hippy movement, anti-war protesting, the sexual revolution and drugs. Seems that generation eventually decided to put on a suit and tie and go to work!

[vision-master]

Imagine what people said about the upcoming baby boomer generation in the late 60's. You had the hippy movement, anti-war protesting, the sexual revolution and drugs. Seems that generation eventually decided to put on a suit and tie and go to work!

and they changed the world...



Today, kids are told to conform into the status quo.

[ROCKMAN]

yellowcanoe – Good point about the boomers getting their act together. OTOH consider that while there were some ups and down during the last 30 or so years the next few decades might not be as manageable as we had it. Being ill prepared is one thing. Running head long into a brick wall is another. But combine the two? That may get really ugly.

A comedian had a somewhat funny take on our standing in the world. Not so much about the US but the Country X that held the 36th place in the world in math skills compared to the US that ranked 38: Poor US…we’re dumber than even Country X.

[vision-master]

Left brain is running the World - HELP!