Are individuals and governments doing enough to prepare people for retirement?
Baby boomers are ensuring that retirement in the 21st century is a vastly different proposition to the one it was for our parents and grandparents.
We are living longer, most of us have superannuation and many of us are working longer – sometimes just to stay socially connected.
Technology is changing the way we live and work, and campaigns against ageism are empowering older workers to continue working full-time, part-time or casually.
But … how many of us plan for retirement? And are governments keeping up with the changing face of retirement?
The 2018 report, titled The New Social Contract: a blueprint for retirement in the 21st century, by the Aegon Centre for Longevity and Retirement, runs a critical eye over retirement worldwide through an annual survey.
The report surveyed 14,400 workers and 1600 retirees in 15 countries: Australia, Brazil, Canada, China, France, Germany, Hungary, India, Japan, the Netherlands, Poland, Spain, Turkey, the UK and the US.
Aegon chief executive Alex Wynaendts says that in a world where responsibility for preparing for retirement is shifting from governments and employers to individuals, we need to ensure that there is universal access to enable people to save for retirement.
“Financial institutions, community groups and other non-profit organisations need to work together to develop long-term saving products and services that encourage people to save when they can. By doing so, we will be able to serve otherwise vulnerable groups, such as those working on a freelance basis or taking time out of work to care for family and loved ones.”
The report identified nine essential features of retirement in the 21st century:
1. Sustainable social security benefits that serve as a meaningful source of guaranteed retirement income and avoid risk of poverty among retirees.
2. Universal access to retirement savings arrangements for employed workers and alternative arrangements for the self-employed and those who are not employed due to parenting, caregiving or other responsibilities.
3. Automatic savings and other applications of behavioural economics that make it easier and more convenient for people to save and invest.
4. Guaranteed lifetime income solutions in addition to social security benefits. Education for individuals to strategically plan how to manage their savings, to know how to avoid running out of money, and to have knowledge of the options to help them do so. Governments, employers and others should increase awareness and encourage individuals to take advantage of opportunities to have a portion of their retirement savings distributed in the form of guaranteed income, such as an annuity.
5. Financial education and literacy so individuals understand basic concepts and retirement-related products and services. Individuals must be able to ask good questions and make informed decisions. Financial literacy must be integrated into educational curriculums so that young people learn the basics of budgeting, investing and managing their savings – skills that can serve them well for the rest of their lives.
6. Lifelong learning, longer working lives and flexible retirement to help people to stay economically active longer and transition into retirement on their own terms – with adequate financial protections if they are no longer able to work.
7. Accessible and affordable healthcare to promote healthy ageing. Governments play a vital role in sponsoring and/or overseeing healthcare systems. Employers should provide healthy work environments and consider offering workplace wellness programs.
8. A positive view of ageing that celebrates the value of older individuals and takes full advantage of the gift of longevity.
9. An age-friendly world in which people can “age in place” in their own homes and live in vibrant communities designed to promote vitality and economic growth for people of all ages.
Do you agree with those recommendations? Is Australia doing enough on all fronts?