People with privileged jobs are always writing crap like this. Why shouldn't people retire?
Journalists, programmers, scientists, executives...we have jobs that can be interesting and fulfilling and are not physically demanding. There's no reason to stop unless you want to.
News flash: not everyone has an interesting job that they want to keep doing until they drop dead. A lot of people work manual labor, or mind-numbing service jobs. 45 years of that and you'd be ready to retire too.
In the Western world at least, our societies are rich enough to support this. I think we should. And almost everyone agrees with me. Check the polls on raising the retirement age.
Medicare costs are rising astronomically, but no more than private health insurance. It is a symptom of the broader health care problem. This needs to be fixed, along with the rest of the health care system.
Social Security is only 4.4% of our GDP and is projected to go up to 6.2%. Oh noes! That is a truly minor cost. We CAN afford it.
Healthcare is a bubble that has been created by removing the actual costs from the providers and the consumers (until you are outside it and have to pay outside insurance). When healthcare is removed from being tied to employers this market will change dramatically.
Healthcare, private IRA accounts, savings etc are all needed today separated from employers as people rapidly change jobs.
Social Security isn't actually much of a problem (in fact the gov't uses it for funds all the time) it is Medicare and Medicaid.
US healthcare cost is actually dominated by overhead. Add up malpractice insurance, medical billing, drug advertizing, insurance companies (more advertizing, administration, reviewing claims etc.), hospital overhead, and proft every step of the way. Overhead just dominates heal care spending which is why Canida has universal heathcare while spending less government money per person than the US.
A lower population means less need be spent to provide health-care services per individual. That three-quarters of the Canadian population living within 150 kilometers (which is approximately 62% the distance of 150 miles) means that fewer resources need be expended to provide that level of service due to population density. If we assume that an identical proportion of the United States population lives within 150 miles of an ocean, that still leaves a population that is more than twice the total population of Canada in the interior. Reaching those people with the same standard of service will not cost as little as the Canadian system.
A lower population means less need be spent to provide health-care services per individual. Why? If the average cost of 300 million people was say 5k/year why would the average decrease when only caring for 30 million people?
The US has ~10x the population density of Canada.
United States — Population - Density: 31/km2
Canada — Population - Density: 3.2/km2
And the population density of a state does not really correlate with its healthcare costs so I think it's a pointless comparison.
PS: You seem to be confusing total cost with average costs.
Social Security is a very, very small part of it. The largest part is medical care. Here is a bite sized 30 min version of a movie called IOUSA that outlines the major problems that are ahead: http://www.youtube.com/watch?v=O_TjBNjc9Bo
There will not be enough money. Period.
The US cannot unlimitedly tax young workers for the rich. They cannot go into unlimited debt. They cannot inflate the currency without major negative repercussions on their currency.
Actuarially speaking, the US cannot afford to pay for 25 to 30 years of both retirement income and medical costs. There is a saying in Canada that probably exists in the States: "If you get to 60, you are more likely to live to 90 than not." Those are a ton of years to pay for. Social security. Medicare. All the other "normal" portions of the US budget, like defense, intelligence, and infastructure.
When you say "6.2% of our GDP" it doesn't sound like a lot, but it is. 4.06% of the current GDP of the United States is spent on their military. That is a TON of planes, missiles, and carriers that are being kept afloat right now and you want Social Security to receive 50% more than that?
Also, The federal budget is not the be all and end all. State budgets, municipal budgets, family budgets all need portions of the 100% of the GDP. The United States has over consumed for far too long and major contractions will take place before normalcy will return.
Government pensions can't be discharged in bankruptcy[1], nor can PBGC[2] take them over. Some rust belt communities are seeing 25% of tax revenues [3] going to pay retired police and school teachers even as the towns dwindle and get bulldozed like Flint, MI. Because courts routinely treat the 14th amendment, section 4, to mean that such debts cannot possibly be made to go away, then taxes will have to be raised just to pay past promises.
3 - The state of NJ is currently spending about 9% of tax revenues to retirees in the form of pensions and health care. A reasonable rule of thumb is that if a growing community is spending less than 10% of their tax revenues on pensions, then they either don't have one, or they're dangerously underfunding their current pension plan.
So Australia just announced raising the Pension age (from 65 to 67 -- applies to people who are now about 50 and younger). The figure that came out with that - was that when the pension was established 80 odd years ago - it was for a life expectancy of about 67 - the expectation was that it was support for old people about to die. Since then - people are living much longer - and the age hasn't gone up.
Also note that Australia has compulsory Retirement savings (9% of Gross Income) for all employees! Which is probably going to be my plan A, since I don't expect the Gov to be able to afford to pay for me when I retire.
Exactly, most people would retire if they could there are plenty of people well over the elderly gap still working because of high costs of living and such terrible retirement plans or lack thereof.
I agree and it's usually knee jerk stuff in response to whatever the current economic situation is. I wouldn't be surprised if they had contradictory articles 10 years ago.
Unfortunately The Economist is not some noname pageview hunting crystal ball blog; they have a surprisingly good history of hitting the nail on the head with their analyses and predicting the future. This article is a part of a series about old age and pensions (you can find all of them in this week's printed edition) and after reading through all of them, I'm afraid to say, it makes a lot of sense.
Misleading. The life expectancy numbers cited by OP are grossly skewed because of one critical issue: infant mortality. Sure, people are living longer, but not that much longer.
The lower life expectancies in recent years were due in part to high infant mortality [1], but my understanding is that infant mortality rates have been low and stable for too long [2] for further decline to completely account for the continuing uptrend in life expectancy we've been seeing.
Also, the decline in infant mortality isn't monotonic. Besides making it more likely that sick newborns survive their various conditions, new medical technology also makes it possible to save some infants who previously would have been recorded as stillborn. Children born prematurely are more than ordinarily likely to die during infancy (all this new technology is, y'know, new), so the infant mortality statistic goes up.
though, so the infant mortality numbers rise on balance.
[1] Although autopsies on the Egyptian mummies has shown tha life was pretty horrific back then. People really did die of old age in their 30s and 40s. Even the rich were somewhat malnourished by our standards. Paleopathologists believe that just about everyone carried a whole ecosystem of nasty parasites, and started experiencing symptoms we associate with old age (particularly arteriosclerosis, loss of bone and muscle mass) around 25 years of age.
Infant mortality hasn't changed a lot in Western countries since the 1960's. In 1960 it used to be 25 deaths/1000 live births, now it is around 10 but this is nothing compared to 100 in 1915; see http://www.marchofdimes.com/images/ihs_img017.gif
The end of the baby boom, I suppose; the infrastructure was there to take care of a lot more children but since the number of children dropped and the infrastructure wasn't donwsized, the quality of care increased. But that's just a guess.
If you are an industrious person you'll get bored an wind up working on another project anyway. better to save money so that you can take mini-retirements in between major career/project shifts. either that or plan on retiring in a country with a cheap standard of living.
plan on retiring in a country with a cheap standard of living.
I guess that might work if you're set to retire soon. In 30 or 40 years, though, the world may be a sufficiently different place that those countries are either no longer so cheap, or have changed in ways so that you no longer want to live there...
I doubt picking the actual locale for retirement requires 30 or 40 years of lead time. There's a significant chance countries with attractive costs of living will still exist several decades from now.
i have to admit - i don't think i would ever want to retire if i could help it. it would be much too boring, i feel. even if it means being a part-time cashier somewhere, as long as i'm able.
I have hobbies, but none that couldn't earn a buck if positioned right. I yearn for the validation that comes with people voting for my activities with their money.
i definitely do, but i don't foresee myself partaking in these hobbies 8+ hours a day, every day in retirement. my major hobbies now are sports related and hacker related. at retirement age, sports won't be so viable and hacker activities will likely be completely different.
Everybody saying they're going to work forever must be planning to start their own companies. Today, and I imagine tomorrow, it's rather more difficult to get work when you're past 30-35-40. $GOD forbid if you have a spouse, kids or an outside interest, as you're expensive and tend to work fewer hours. I'm a little past 50 and in my second country chasing work...
I agree. If the cost of labor rises, robots or software will appear in the marginal cases--expensive at first, but not ultimately--and supply, demand, and price will reach equilibrium again.
The world is a complex place. It's very silly to look at one piece of the system (people are living longer and having fewer children) and presume that nothing will actively respond to those changes.
Estimated receipts for fiscal year 2007 were $2.4 trillion.
* $1.1 trillion - Individual income tax
* $884.1 billion - Social Security and other payroll taxes
* $260.6 billion - Corporate income tax
* $74.6 billion - Excise taxes
* $28.1 billion - Customs duties
* $23.7 billion - Estate and gift taxes
* $48.4 billion - Other
The IRS estimated that there were about $345 billion in uncollected taxes.
TOTAL SPENDING
The President's budget for 2007 totals $2.8 trillion. Percentages in parentheses indicate percentage change compared to 2006.
This budget request is broken down by the following expenditures:
* $699.0 billion (+4.0%) - Defense
* $586.1 billion (+7.0%) - Social Security
* $394.5 billion (+12.4%) - Medicare
* $367.0 billion (+2.0%) - Unemployment and welfare
* $276.4 billion (+2.9%) - Medicaid and other health related
* $243.7 billion (+13.4%) - Interest on debt
* $89.9 billion (+1.3%) - Education and training
* $76.9 billion (+8.1%) - Transportation
* $72.6 billion (+5.8%) - Veterans' benefits
* $43.5 billion (+9.2%) - Administration of justice
* $33.1 billion (+5.7%) - Natural resources and environment
* $32.5 billion (+15.4%) - Foreign affairs
* $27.0 billion (+3.7%) - Agriculture
* $26.8 billion (+28.7%) - Community and regional development
* $25.0 billion (+4.0%) - Science and technology
* $23.5 billion (+0.0%) - Energy
* $20.1 billion (+11.4%) - General government
The article works from the assumption that government funding defines retirement. This seems silly to me. Even if governments stopped paying old people entirely (unlikely), many would still retire. You're supposed to save for it. I'm certainly not planning to depend on a pension or government handout; they'd be nice if I could depend on them to exist, but why would I want to allow others to control the timing of my retirement or my livelihood?
The article also seems to draw the silly conlusion that since people are living longer and having fewer children, retirement will disappear entirely. Really? That might change the cost. Fewer folks might do it, or folks in general might have to do it later in life, but in a world as wealthy as this one, I doubt anything short of Armageddon could eliminate the practice entirely.
Will life expectancy keep on increasing as it is now, I dont think so, because the life expectancy now is dependant on the people who were born a generation before, but considering this generation is getting fatter and fatter, maybe the life expectancy will drop in the future, maybe !
when i get old i just hope my mind stays sharp and i meet the (low) physical requirements for typing at a computer, or am able to learn those new-fangled mind-typers.
Journalists, programmers, scientists, executives...we have jobs that can be interesting and fulfilling and are not physically demanding. There's no reason to stop unless you want to.
News flash: not everyone has an interesting job that they want to keep doing until they drop dead. A lot of people work manual labor, or mind-numbing service jobs. 45 years of that and you'd be ready to retire too.
In the Western world at least, our societies are rich enough to support this. I think we should. And almost everyone agrees with me. Check the polls on raising the retirement age.