Many baby boomers dream of an idyllic retirement, spending time with their grandchildren, gardening or taking holidays. As the post-war generations steadily cross the fence that separates active working life from a more genteel way of enjoying oneself, they are finding that their dreams are being shattered by the turbulent scenario of the first decade of the millennium.
It is important that politicians, sociologists and economists understand the vast socio-economic problems that the post-war generations are facing as they will soon form one of the largest sectors of our society. It is a shame that in Malta we rarely hear or read about empirical evidence on the social-economic issues affecting those who are just over or near the age of retirement.
So I often look for evidence elsewhere. Recently I came across a very interesting study that opens a window on the conditions affecting new retirees in the UK. The insurance giant Aviva has just published the results of a survey conducted amongst 1,400 people over the age of 55 who were asked about their plans for the future.
More than half said that they intend to retire between the ages of 66 and 74, while 18 per cent said they expect to retire between 71 and 74. The main reason they quoted for this apparent love for work is that they need “to improve their finances”. Other reasons were “to keep my mind active” and “keeps me from getting under my partner’s feet”.
But some of the other results of this survey are even more alarming. A quarter of those questioned said that they have less than €2,500 in savings, while only 13 per cent had more that €130,000. Basic state pensions in the UK are not much higher than they are in Malta at about €14,000 per annum. For many this is the only pension that they get.
One advantage that British retirees have over their Maltese counterparts is that British society and officialdom suffers much less from ageism – discrimination on the basis of age. Healthy people in their 60s and 70s in the UK are more likely to find job opportunities for part or full-time work than anywhere else in Europe.
But there is a risk that the current economic slowdown combined with fiscal measures to control public spending in most EU countries will reduce the opportunities for older workers to adopt a do-it-yourself approach to fixing their bleak financial situation.
Stronger political leadership is needed to address this serious socio-economic problem effectively. With life expectancy constantly improving, and with the public health systems becoming increasingly unsustainable in some EU countries, politicians need to come up with practical measures to push the frontiers of retirement.
Last week’s European Commission’s green paper on retirement is a belated acknowledgment that most EU countries, including Malta, need to do something drastic about their pensions’ system.
Arguing whether our pensions’ problem is one of affordability or sustainability is a distraction in the debate on the real issue – many present and future retirees face hardship unless the pensions’ system is reformed now.
Some EU governments still seem to believe the lump-of-labour fallacy – a belief that the amount of work available to workers is fixed. This leads to restrictions on those who would like to continue working but are prevented from doing so by tight labour legislation. In Malta, for instance, public service employees do not have the right to continue working beyond retirement age to improve their financial situation.
Ironically, allowing people to work for as long as they wish, even if under different conditions from those they enjoyed when they reached their statutory retirement age, could prove to be one of the less painful measures to make our public finances more sustainable.
But the most compelling reason I find for liberalising the labour market on this particular issue, is that it is fair and just to enable people to help themselves, and socially inequitable to let people wallow in poverty in their old age.
The younger generations need to take heed of what could happen to them if they continue to brush aside the values of thrift and prudence in spending. The age of waste and profligacy are over.
Waiting for politicians to pave the younger generations’ road to retirement with golden promises will only result in painful disillusionment in a few years time. Self-help will be the hallmark of success for the X and Y generations – those born roughly between 1960 and 2000.
jcassarwhite@yahoo.com