Will it ever end?

[Chris Harris]

Looks like there will be even longer until we can retire:

Goverment Plans

Any Thoughts??
Chris.

[sever oon]

It could...it just depends on our values as a society.

Economically, we have to become more productive to live "better" lives (live longer, less work, more utility, more access to resources, more efficient use of scarce resources, etc). We have become more productive on a more or less regular basis since the Industrial Revolution (and before, I assume, but I only know about since then). We could: (1) use this increased productivity to have the same lifestyle while doing less work, or (2) use the extra time we have due to increased productivity to create even more and continue increasing productivity.

Keep in mind that raising the retirement age is not necessary a step backwards. It could still, in fact, be a step forwards in the overall scheme of things. When Social Security was put into effect and retirement ages were set at 65, something like 10% of the population made it to that age. In other words, the vast majority of people worked right up until they were too sick or until they died. Now, the average life span is older than 65, and the majority of Americans see at least several years of retirement. This is undoubtedly an upward swing when it comes to standard of living. Arguably, increasing the retirement age to 70, or even getting rid of it altogether (and governmental retirement benefits) would still not mean we regressed to pre-Social Security days in terms of our standard of living.

Even if we had to work at jobs today until we died, the jobs themselves are more interesting, we work fewer hours, with a higher standard for work environments, etc, etc. All told, even if this were the case we're still far better off than the first recipients of Social Security. As evidence of this, I would point to the fact that a large chunk of the over-65 population would retire at 65 no matter what the government does with retirement ages and Social Security, simply because they can afford to. As a group, senior citizens are the richest demographic in America (makes sense, too...they've had the most time to accumulate wealth).

It is totally conceivable to me that over the next couple hundred years or so, we will not only find ways to extend our lives well into the hundreds, but we may only require a few workers to support hundreds of retired people simply because technology allows us to be so productive. On the other hand, I expect that this will not, in actuality, manifest in this way because, quite simply, healthy, educated people want to work. Most people like the challenge, they like the idea of contributing to society and receiving recognition and reward in return.

If you are interested in the fundamental concepts on which my argument herein is based, grab a wonderful, engaging book called Naked Economics by Charles Wheeland. It will change the way you think about public policy and economics, and furthermore, it's not a partisan book--it's just a not-very-controversial summary of what every economist knows.

sev

[Jeroen Wenting]

Another factor to consider: when the mandatory retirement age was set at 65 years old most people started working fulltime at age 15 or earlier.
Today we start working fulltime at age 20 or later (depending on level of education, people with university degrees usually start at age 25 or so).
That's 5-10 years less time earning money, paying taxes.

As the number of people entering the marketplace drops both from a decreasing birthrate AND an ever later age at which people start being productive while at the same time the number of people reaching retirement age keeps going up a crisis becomes clear.
The number of productive people goes down sharply while at the same time the number of unproductive people gets ever larger because they live longer after retirement.

At some point (and that point is very very near in the EU) those who are working will be unable to pay for those who are not.
When that happens something has to give.
Either the standard of living for all drops drastically (something already in progress), people are forced to work to a higher age (the UK plan is just one program along those lines, in other countries early retirement is being deterred ever more), or you start killing people who reach a certain age or have conditions making them incapable of working to reduce the burden of the old and sickly on the economy (that is not yet happening, at least in Europe. Primitive tribes are known to do it).

[Don Stadler]

Originally posted by sever oon:
It could...it just depends on our values as a society.

Economically, we have to become more productive to live "better" lives (live longer, less work, more utility, more access to resources, more efficient use of scarce resources, etc). We have become more productive on a more or less regular basis since the Industrial Revolution (and before, I assume, but I only know about since then). We could: (1) use this increased productivity to have the same lifestyle while doing less work, or (2) use the extra time we have due to increased productivity to create even more and continue increasing productivity.

This is true.... What is breaking the finances of retirement systems (both public and private) is the fact that they are based upon the assumption that the average recipient will live between 2 and 4 years into retirement. Increasingly that is nonsense, with the average increasing to double or more that span in the rich world. The time is rapidly approaching when the average person living to retirement age can expect to live to 80 or later.

Let's assume that actual retirement is age 65. That means that the system will have to support the average worker for 15 years rather than the 3 years it did during the 60's. This is exacerbated by the fact that work starts later for most knowledge workers (like Java programmers). A typical factory worker began work at 18 and retired at 65 (during the 50's). They worked 47 years to retire for maybe 3 years. Today many engineers begin work at 22 or 24 and retire at perhaps 55, and live until 80. So we work 31 years to retire for 25 years? It doesn't work very well.

My greatest fear is that I won't be allowed to work until I'm 70. Not as a productive, high-earning software engineer that is. The years of experience tend to help only marginally because of the vicious pace of change in our industry. You can be a top 5% Unix and C hacker, but where does that leave you when the jobs go into C++? Below-average at least for a while. Climb back up the skills heirarchy in C++, but what happens when the market goes to Java and M$ Windoze? You guessed it, same thing.

The answer is to take your skills upmarket, some say. This can work for a time, but even here revolutions happen which can overturn your best laid plans. My observation is that many (most?) 'architects' are worse than useless on projects. I don't see the clear value of many of the methodology and planning people and suspect that TDD (Test-driven development) is going to sweep many of them away in the coming years. Management is no safe haven either.

There are three problems to be solved, I think. The first is to remove the legal and physical impediments to extending work years. This is what the British government is trying to do with this proposal. They are signaling to the society that it's going to become good and normal to work late into life.

A second problem will be to help older workers to manage the challenges of working into their 70's. Older workers are more costly for employers in some respects, and things like subsidized health insurance can help them stay comptetitve with their juniors. Flexible work schemes permitting older workers to work fewer hours per year but on terms comparable to those commonly available only to full-time workers today would help as well.

The final problem is finding a way to help knowledge workers over the hump of updating their skill base when their industry changes radically is the third problem. The wastage of older IT workers is appalling. And I think unecessary. But I don't see too many answers for this one out there, other than spending a lot of money and time retraining. Right now I'm going through a couple of Richard Hightower's books, upgrading my Struts & Hibernate knowledge and learning the leading-edge open-source testing and build tools (JUnit family and Maven). Cool stuff but hard to stay on top of.

[Sadanand Murthy]

Originally posted by Jeroen Wenting:
Another factor to consider: when the mandatory retirement age was set at 65 years old most people started working fulltime at age 15 or earlier.
Today we start working fulltime at age 20 or later (depending on level of education, people with university degrees usually start at age 25 or so).
That's 5-10 years less time earning money, paying taxes.

As the number of people entering the marketplace drops both from a decreasing birthrate AND an ever later age at which people start being productive while at the same time the number of people reaching retirement age keeps going up a crisis becomes clear.
The number of productive people goes down sharply while at the same time the number of unproductive people gets ever larger because they live longer after retirement.

At some point (and that point is very very near in the EU) those who are working will be unable to pay for those who are not.
When that happens something has to give.
Either the standard of living for all drops drastically (something already in progress), people are forced to work to a higher age (the UK plan is just one program along those lines, in other countries early retirement is being deterred ever more), or you start killing people who reach a certain age or have conditions making them incapable of working to reduce the burden of the old and sickly on the economy (that is not yet happening, at least in Europe. Primitive tribes are known to do it).

There is one more alternative that Germany, for example, has started to use & that is to get younger immigrants in to expand the tax base & make it easier for them to stay.

[Helen Thomas]

The irony is the younger ones have to keep working longer and harder to
help support those who retire at 70 or cannot find a job at 50 onwards. Ageism should be recognised as an evil practise and rooted out. Easier said than done unless it becomes not unusual to find old and young learning and re-learning together.
[ July 01, 2004: Message edited by: Helen Thomas ]

[Jeroen Wenting]

Originally posted by Sadanand Murthy:


There is one more alternative that Germany, for example, has started to use & that is to get younger immigrants in to expand the tax base & make it easier for them to stay.

No, that's a major problem in Germany because the masses of cheap eastern European labour are driving ever more Germans out of jobs and into the unemployment lines.

It won't matter anyway in the medium term as all those foreigners will be retiring and then be elligible to draw German pensions...

That's in fact a major part of the problem in much of Europe.
Many of the foreign workers brought in in the 1960s and '70s to work in cheap jobs are now going into retirement and drawing full pensions. Their kids are undereducated and have no job (or got a state-sponsored education here and went back home to lead companies there) so don't bring in money from which to pay those pensions.

In Europe retirement money is NOT as many people think set aside as you get older by the government and paid to you as you retire.
It's in fact paid for by the social security premiums of those people who do have a job.
As the number of them declines ever further it is now coming to the point where every active worker has to pay for the retirement money of several retired people (plus the unemployment money for the millions of jobless, etc. etc.).

[Stephen Pride]

Originally posted by Helen Thomas:
The irony is the younger ones have to keep working longer and harder to
help support those who retire at 70 or cannot find a job at 50 onwards. Ageism should be recognised as an evil practise and rooted out. Easier said than done unless it becomes not unusual to find old and young learning and re-learning together.

[ July 01, 2004: Message edited by: Helen Thomas ]

What companies must wrangle with when keeping older workers isn't so much their salary, but moreso their cost of benefits. For many companies, this is the real reason they tend to discriminate the elderly worker. Not because they may be lacking in skill or mental clarity, but because they are costing the company more for health/medical reasons. What I am finding today in many companies is that they are changing their benefits strategy to encourage younger, single employees to come work for them, and making it more burdensome on older employees and/or those with a family. It is cheaper both in salary AND especially benefits to hire the former over the latter. Also, and I won't dwell on it too much, is the fact that these companies are trying to screw workers more and more by changing retirement perks, such as pensions (i.e., many have gone to the cash balance plan in lieu of the old guarenteed types of pension plans).

[Warren Dew]

That's a good point, Stephen. It does seem a bit unfair to force companies to pay more to get older workers for the same job, especially as this will result in paying the younger workers less.

The problem is, if I go in and say, "I won't cost you more because I'll pay my own health insurance", the health insurance ends up being paid for out of after-tax money instead of before-tax money, which makes it cost twice as much. At least, that's how it works in the U.S.

There ought to be a solution to this somewhere.

[Frank Silbermann]

Originally posted by Jeroen Wenting:
No, (immigration hasn't helped) in Germany because the masses of cheap eastern European labour are driving ever more Germans out of jobs and into the unemployment lines.

It won't matter anyway in the medium term as all those foreigners will be retiring and then be elligible to draw German pensions...
...
Many of the foreign workers brought in in the 1960s and '70s to work in cheap jobs are now going into retirement and drawing full pensions. Their kids are undereducated and have no job (or got a state-sponsored education here and went back home to lead companies there) so don't bring in money from which to pay those pensions.
...
it is now coming to the point where every active worker has to pay for the retirement money of several retired people (plus the unemployment money for the millions of jobless, etc. etc.).

It used to be that people had children partly in the hope of having someone to take care of them in old age. Then democratic socialism alleviated the fears of old age, and high taxes made it infeasible to have many children anyway. (Gasoline taxes, for example, make it practically impossible for the average European to drive a car that can fit more than two children -- and on public transportation each child requires an additional ticket.)

Having traveled a bit and noticed how much more common stupidity, ignorance and violence is among the American lower classes, I can only conclude that America's comparatively better economic situation is due to not having slid so far down the slope towards socialism. (Whether we can reverse course or whether we will merely follow Europe over the waterfall is another question.)

At least Europe's socialized medicine should reduce the disincentive against hiring older workers. Unfortunately, I don't think it would work in America, as politicians will waste the money by selling jobs to do-nothing medical bureaucrats in exchange for votes and election campaign contributions -- just as they do now with public education. (We spend far more per pupil than Europe, and our public education system is a cruel joke. I have to pay taxes to support it _and_ pay private school tuition so my kids don't have to rely on it.)

[Sadanand Murthy]

Originally posted by Frank Silbermann:


(We spend far more per pupil than Europe, and our public education system is a cruel joke. I have to pay taxes to support it _and_ pay private school tuition so my kids don't have to rely on it.)

And you (as well as I am) are also paying for that mass murderer who is in prison for the rest of his life, with absolutely no chance of getting out alive, if he desires to pursue education to any level, he can get double, triple PhDs & we pay for his PhDs.

[Jeroen Wenting]

Originally posted by Sadanand Murthy:


And you (as well as I am) are also paying for that mass murderer who is in prison for the rest of his life, with absolutely no chance of getting out alive, if he desires to pursue education to any level, he can get double, triple PhDs & we pay for his PhDs.

Exactly why the death penalty is a good way to save money...

At least Europe's socialized medicine should reduce the disincentive against hiring older workers. Unfortunately, I don't think it would work in America, as politicians will waste the money by selling jobs to do-nothing medical bureaucrats in exchange

Our socialised medical system is a massive burden on the economy.
The amount of money going into it is ever increasing while the capabilities and quality are going down the drain.
Money is wasted constantly, in the Netherlands between 2001 and 2003 there is a total of 3.5 BILLION Euros which was earmarked for increasing staffing levels of nurses in hospitals which simply went missing. Noone can find what happened to it, the only thing known is that no new nurses were hired.
And that's just an increase in the budget that cannot be traced to anything that actually happened...

I too have to pay taxes for medicare (or our equivalent of it) while having private insurance for myself.
That situation will last until the end of next year as the government has decided to ban private health insurance, instead forcing the lowest level of medical service on everyone but of course at a different price (the cost of the mandatory insurance that will replace it (actually tax of course) will depend on income, and on top of that the level of service received for that money will be reversely dependent on income so people with higher income pay more for less).

My parents suffered badly from the terrible situation in our healthcare industry in 2002.
My mother lost a foot and part of a lower leg due to medical errors (negligence, lack of staff, poor training) while my father almost died when he was prescribed the wrong medication on discharge from hospital (he got prescribed medication to increase his heart rate after a heart attack, should have gotten tranquilisers), again negligence.
For both of them it wasn't the first time either...

Many people here now go to a doctor only if the alternative is certainly worse...

It's pretty much the same in education.
My parents had a pretty good income meaning they got no sponsorships or grants to get me and my sister through school and university.
They were pretty hard pressed to pay for it all for 2 kids because the grants are decided per child based on income with no regard to the number of children.
So they had to pay full price to get 2 children educated while not having twice the disposable income to pay it from that they'd have to have to get grants for one child...