The Benefits of Lower Retirement Ages
HAVANA TIMES – Yes, lower the retirement ages! That is the key message that workers worldwide are conveying to their governments.
Rather than increasing retirement ages as many governments are now proposing, men and women worldwide want to stop working well before they reach old age, which is approximately 60 years.
After toiling for years in factories, offices, shops, backrooms, vehicles, fields, etc., most workers around the world want to stop working before they reach old age. That desire translates into exiting the labor force and receiving a government pension at approximately age 55 years.
Government officials, economic advisors, business leaders and many others calling for raising retirement ages will no doubt consider lower retirement ages to be preposterous, verging on financial blasphemy and leading to an economy’s doom. Some have argued that lowering retirement ages places an unaffordable and unfair burden on taxpayers.
On the contrary, rather than leading to an economy’s ruination, a retirement age of 55 years may usher in a “retirement renaissance” resulting in untold benefits to societies worldwide.
The renaissance will enhance and extend the quality of life for those in retirement. It is also expected to decrease unemployment rates, lead to increased motivation among younger employees to continue working until retirement, provide businesses with energetic, healthy, well-trained youthful workers as well as foster cross generational interactions, recreation, hobbies and cultural activities.
In addition, the renaissance may contribute to raising low fertility levels by making childcare more readily available. Today two-thirds of the world’s population lives in a country where the fertility rate is below the replacement level of about 2.1 births per woman.
The retirement renaissance will permit retired men and women with adult children to assist with childcare and related activities. With grandparents available for childcare, young working mothers and fathers can be expected to be more favorably disposed to having additional children.
The protests, demonstrations and objections in Asia, Europe, North America and elsewhere reflect the public’s resistance to working until, as they claim, broken-down and close to near death. Large majorities of workers have clearly conveyed their opposition to their respective government proposals requiring people to work well into old age before they are entitled to receive their promised retirement pensions.
The various projected insolvencies of government pension systems, often cited as justification for raising retirement ages to record breaking high levels, are often dismissed by workers and their supporters as irrelevant. The insolvencies, workers contend, are simply financial excuses concocted by government officials and their wealthy supporters, who object to paying their fair share of taxes, to justify their goal of raising retirement ages and cutting pension benefits.
In addition to higher taxes on the wealthy and large corporations, workers argue that governments have plenty of financial resources at their disposal to permit lowering retirement ages and financing pension programs. Some contend that countries could substantially reduce their defense spending and redirect the substantial savings to retirement pension programs.
Admittedly, it is certainly the case that on average people are living longer than in the recent past and the proportions of elderly are increasing. However, those increases in longevity have not been shared equally across populations.
In general, those with high incomes have experienced longevity gains, while low earners have seen little gain in longevity. Moreover, workers contend that living longer should not translate into working longer and receiving reduced retirement pension benefits.
Both men and women spend decades working at jobs that they don’t particularly enjoy and for bosses they loathe. Many would argue that it only seems fair and reasonable to have several decades available to workers permitting them to do what they desire before they eventually face death. People are largely opposed to working until they are tired, bed ridden and unable to enjoy the remaining years of their life.
It is also the case that women on average live several years longer than men. At age 65, for example, at the global level women live close to three years longer than men. Even larger differences in life expectancy at age 65 between women and men are observed in other countries, such as France and Japan at nearly four and five years, respectively (Figure 1).
Taking into account those well documented sex differences in longevity, the retirement age for women could be several years greater than that for men, perhaps 57 and 54 years, respectively. Such a difference between women and men would help to ensure gender equality in the number of retirement years.
In addition, neither men nor women should be forced to work beyond the recommended lower official retirement ages for men and women. Of course, exceptions should be permitted and lower official retirement ages should not bar individuals from working in old age if they choose to do so.
Some heads of state, elected officials, government bureaucrats, investors, business owners, academics, the wealthy, entertainers as well as many others are choosing for personal reasons it appears to work beyond official retirement ages. Some current heads of state, for example, are well beyond the official retirement ages of their respective countries with few of their constituents objecting (Figure 2).
With the world population reaching a record-breaking 8,000,000,000 people, the number of young women and men available to work is the largest ever. Whereas the proportion of the world’s population between ages 18 to 59 was 52 percent in 1950 and numbered 1.3 billion, that proportion increased to 56 percent in 2022 and numbered 4.5 billion.
There’s no denying the fact that the world’s population is older than in the past. Over the past 70 years, the proportion of the world’s population aged 60 years and older has nearly doubled, from 8 percent in 1950 to 14 percent in 2022. However, the increase in the proportion elderly is offset by the decrease in proportion of children below age 18 years from 40 percent in 1950 to 30 percent in 2022 (Figure 3).
Also, some believe that rapidly improving technologies, including robots,androids and artificial intelligence, can complement and broaden a country’s labor supply. Those technologies are expected to offset reductions in the size of the labor force as people retire at around 55 years of age.
Many governments have enacted or are seriously considering raising retirement ages. Increases in today’s retirement ages are viewed by workers as nothing more than pension benefits cuts.
Proposals for raising retirement ages are viewed by workers as relying on faulty actuarial analyses of bankruptcy, dire warnings of pension insolvency and catchy phrases such as “Vivre plus longtemps, travailler plus longtemps” (“live longer, work longer”).
Moreover, conservative government officials in general are resistant to raising taxes on the wealthy and large corporations. However, many of those officials are favorably disposed to raising retirement ages, which would result in reductions in pension benefits. Also, some government officials have rejected calls to return retirement ages back to 60 years.
In sum, in addition to meeting the wishes of billions of working men and women who want to retire well before reaching old age, lower official retirement ages of approximately 57 years for women and 54 years for men may usher in a “retirement renaissance” that could result in untold benefits to societies worldwide.
Joseph Chamie is a consulting demographer, a former director of the United Nations Population Division and author of numerous publications on population issues, including his recent book, “Population Levels, Trends, and Differentials”.