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The future of retirement

Many would love to retire from work at the age of 50, embark on a round-the-world cruise and take life easy after years of having to deal with a nasty boss and even nastier workmates.

This is the staff that dreams are made of. But real life is often rather different. Politicians who fret about the future of pensions warn that people will have to work for longer as we are living longer, but most pension funds are not sufficiently viable to support pension pays for long.

Other politicians bury their head in the sand as their vision for their country does not go beyond the next election. They refuse to tackle the pension problem with any determination and just repeat the mantra that there is no need to extend the retirement age as the solution is to entice more women to join the workforce.

Those in their 40s and 50s need to engage in some deep soulsearching to determine when they are likely to retire and what their retirement quality of life is likely to be.

The respected medical journal Lancet recently published a document entitled the Global Burden of Disease Study in which they analysed data from 127 countries, including Malta, on the quality of life people were expected to enjoy when they retire.

The main finding of this study is that life expectancy increased by 10.1 years worldwide between 1990 and 2015, but healthy life expectancy – the time people will live without illness or disability seriously affecting them, grew by an average of only 6.1 years.

Put simply, we may be living longer but a good part of the extra years are seriously affected by debilitating illnesses. So linking retirement age to longevity index is at best fallacious and at worst unfair. The message for those who are forward looking and like to plan their future is to take nothing for granted as regards their quality of life when they retire.

The Lancet study also has another unsurprising finding: one of the risk factors for illness or disability in western countries, including Malta, is smoking, followed by high blood pressure and being overweight.

This study did not enter into the financial aspect of retirement. It does not need much financial analysis to conclude that those who rely on a state pension of less than €1,000 per month are unlikely to enjoy the financial security that is needed to avoid the anxiety that affects so many older people.

It is a sad reality that more people than ever are living with chronic illnesses including sight loss, osteoarthritis, back and neck pain, depression and anaemia caused by a lack of iron. With free public health services overstretched and underfunded, those planning their retirement should consider changing their lifestyle if they want to enjoy as healthy a retirement as possible.

They will also do well to make sure that they have enough savings to supplement their state pension and not have to worry where the money for their next bottle of pills is going to come from.

The low interest rate scenario is making long-term financial planning that much harder. The UK government is planning to introduce special bonds aimed for the elderly that will pay a subsidised rate of interest to help pensioners supplement their income.

This is a tactic worth adopting even locally as more and more pensioners struggle to make both ends meet. I find the proposal of releasing home equity as people get older a rather untenable one.

Equity release schemes are not cheap as lenders charge a high premium for hedging their risks of forwarding money to people who are ageing but do not know for how long they will live. Private health insurance does not come cheap but is one of the options that those who take their retirement seriously should be considering.

I find it much more sensible to save for private insurance as one gets older rather than take an extra holiday every year to keep up with the Jones. There are serious flaws in almost all western political systems when it comes to dealing with an ageing population.

Little is being done to convince people to lead more healthy lifestyles to prevent, or at least delay, chronic old age diseases. Free health systems remain underfunded at a time when people are living longer. Relying on politicians to resolve these issues is the stuff illusions are made of.

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