RETIREMENT AROUND THE WORLD

Some countries age quickly, others more slowly. Retirement ages therefore vary around the world, and seniors in some countries continue working after retirement. What changes to retirement systems are being discussed? How are seniors treated in different countries—with respect, with special privileges? A comparison of the retirement systems in five countries

USA:

Staying active longer

Financial worries and fear of boredom keep seniors in America working past retirement

Anyone who’s ever been to a Costco warehouse club outlet in the USA is familiar with the friendly senior citizens who check member IDs at entrances and customer receipts on the way out. There’s a simple reason why these elderly individuals still work: Most Americans have not made sufficient retirement provisions. The average US household has less than US$100,000 in savings. Many seniors therefore continue working after the official retirement age in order to earn extra money and—more importantly—hold on to a good health insurance policy. Americans generally retire later these days than in the past, and even then they don’t remain idle by any means but instead continue to work parttime — as Uber or Lyft drivers, for example.

Retirement in the USA is governed by the Social Security system, which was created in 1935 in response to the Great Depression. Everyone who works, even if they are self-employed, pays into the system on the basis of their income and later receives a monthly pension. Social Security pays the retirement pension for 42 percent of all US citizens. The age at which Americans become eligible to receive their full Social Security pension was recently raised from 65 to 66 and will increase further over the next few years. It’s theoretically possible to retire at 62, but the Social Security Administration (SSA) will then reduce the retirement benefit by 26 percent. It therefore makes sense to wait.

Company pensions have become rare in the USA. According to a survey conducted by the LIMRA Secure Retirement Institute in 2016, most people over 75 in the USA also receive a pension stemming from a company program. However, individuals who are 34 or younger can no longer count on such retirement benefits, in part because fewer and fewer people are entering into longterm employment relationships. American workers will thus continue to retire later in life. For example, the proportion of men and women who continue to work after 65 will increase from 23 to 27 percent (men) and from 15 to 20 percent (women) between 2014 and 2022, according to the Population Reference Bureau. A total of five percent of people in the USA actually fear that their financial situation will never allow them to retire completely.

The concept of the restless senior is also part of the American self-image of a nation of people who have the courage to start anew and don’t want to be consigned to the scrap heap. “These days, retirement is not a clean break but instead a dynamic process in which people reinvent themselves and go through several phases,” says Richard Wald, a Senior Financial Advisor at Merrill Lynch Wealth Management, who recently present ed a study on this topic. Harold Spielman, a former advertising manager, is a perfect example of how this process works. After his wife died, Spielman wrote a classic self-help book entitled Suddenly Solo, thus launching a movement for single senior citizens.

The USA doesn’t need to worry about negative population developments. On the one hand, around 75 million baby boomers will have retired by 2030, thereby changing the face of America and making one out of every five Americans a senior citizen. On the other hand, the country’s high birthrate (especially among the non-white population) and the continual immigration of young families mean the USA is in no danger of becoming a rapidly aging society.

Nevertheless, even millions of enterprising seniors who see themselves as “forever young”—and are viewed as such by advertisers — cannot change the fact that America will also face a nursing care problem as more and more people become chronically ill and need extensive caregiving services. Moreover, America’s social welfare system is rather limited compared to that of other industrialized countries and is therefore not prepared to handle such extensive nursing care.

Steffan Heuer, San Francisco

Schweden I think I’ll keep on working

Early retirement? Not in Sweden, which is number one in the EU when it comes to integrating older individuals into the labor market

Sweden, too, is struggling with an aging society—20 percent of its ten million residents are drawing a pension, and this figure is expected to double by 2050. The pension system can only remain viable over the long term if people stay in the workforce longer. Unlike most other industrialized countries, Sweden has a flexible retirement age that can range from 61 to 67. The average age at which Swedes say goodbye to the factory or the office for good is actually 65, which is a record within the European Union.

There are two main reasons for this. The first is that the government in Sweden uses tax incentives to try to keep people working for as long as possible. The second is that the government does everything it can to make things easier for the “golden agers,” among other things by offering them further education programs past the age of 50. “Even though Sweden is being impacted by aging, things seem much better there than in Germany, for example,” says Ole Wintermann from the Bertelsmann Stiftung. “For example, the number of employed people in Sweden will barely decline between now and 2060.”

People who retire in Sweden can generally look forward to an annual pension increase of seven to eight percent, as well as reasonably priced and relatively uncomplicated home care service if needed. Most Swedes traditionally remain in their apartments or homes until a very old age. Having several generations living under one roof is relatively rare, as Sweden is also one of the most sparsely populated countries on earth. There are 22 residents per square kilometer in Sweden; Germany’s population density is ten times higher than that. As a result, children in Sweden often have to move to another city when it comes time to study or go to work.

Not all Swedish seniors want to hold on to their homes or apartments for a long time; sometimes they stay because there’s a shortage of space in retirement homes. Sweden’s retirees also face a deterioration of their standing in society. In the World Values Survey of more than one hundred countries, Sweden was among the lowest-ranking nations in terms of its view of senior citizens. Only 0.7 of the Swedes who were surveyed reported that people over 70 enjoy a very high standing in Swedish society.

Nevertheless, the PricewaterhouseCoopers (PwC) consulting firm believes Sweden is a role model when it comes to integrating seniors. PwC’s Golden Age Index study compared the way older individuals are integrated into the labor market in different countries. Sweden ranked number one in the EU here, and only Iceland and New Zealand were ranked higher worldwide. “Higher employment rates for older workers tend to have a positive effect on the work climate and business performance,” the study concluded. And: “A higher proportion of older people in the workforce has a positive effect on gross domestic product.” In other words, the higher costs associated with an aging society can be offset in part by the contribution older workers make to economic growth.
Klaus Rathje, Berlin

Indien Years of sunset

Some elderly Indians lead independent and secure lives, but most live in poverty and suffer abuse and neglect

When he retired at the age of 65, Mani, who is now 80, had savings and investments and also owned real estate in a busy district in Mumbai, which is the business capital of India. Mani now lives with his wife in a senior citizens home. Jankabai, a 65-year-old domestic worker, is at the other end of the retirement spectrum in India. She continues to work hard, despite the fact that her body sometimes can’t handle the strain. After she retires at some point, she will live off her scant savings, which will eventually dry up. She currently lives with her son and his family, of course, but having to rely on relatives when you’re old also has its drawbacks. “In India, the elderly depend heavily on the younger generation, especially in the poorest families,” says Sheilu Srinivasan, founder and president of the Dignity Foundation, which helps seniors live dignified lives. “Old people in slums and in poor rural areas receive virtually no government assistance and have no savings of their own.”

India’s cultural tradition stipulates that the elderly are to be treated with reverence. Family ties are strong and the provision of financial support from relatives is a given. However, these values are being weakened by increased urbanization. The fact that only 12 percent of the working population is eligible to claim a pension is therefore becoming a problem. In general, 1.2 billion people in India lack a comprehensive social security system.

Larger companies usually have pension programs for their employees. “Workers in unorganized sectors are not as well off,” says Vish Iyer, Vice President and Global Head of Legal and Corporate Affairs at Tata Consultancy Services. “Such workers are day laborers and don’t have the financial flexibility to save for retirement.” The problem is that this “unorganized sector” consisting of casual workers and small entrepreneurs is larger in India than virtually anywhere else in the world.

This problem is offset somewhat by the fact that medical treatment at government hospitals is free, although patients do have to pay for medications. “India also has around 5,000 free retirement homes, most of which are run by religious groups,” says Srinivasan. “However, the residents of these homes are often neglected and at the mercy of incompetent managers and staff.” The proportion of old people among the population is much lower in India than in the rich industrialized countries. However, because of India’s rapid population growth, the absolute number of people over 60 is expected to rise from 100 million today to 152 million in 2050. In any case, one out of eight people over the age of 60 worldwide lives in India.

The economic situation is better for India’s middle class, whose members are able to obtain loans at favorable terms for purchasing apartments and homes, which can be used as retirement investments. However, older members of the middle class complain that their materialistic children often take advantage of them by forcing them to sign over ownership of their homes. “We’ve actually set up a hotline for such cases and offer affected seniors legal assistance,” says Srinivasan.

India needs to implement a new political program for the elderly. It should focus not only on financial security but also on socio-psychological aspects, health, and housing.

Usha Munshi, Mumbai

Deutschland:Ages the best

Poverty among the elderly? Not a problem. Germany’s seniors are financially well off and satisfied—and “younger” than ever before. The state pension system is still reliable

Germany is in its best years—the “golden years of a mature economy,” as the population researcher Reiner Klingholz puts it. The country continues to benefit from the demographic dividend generated by the baby boomers from the 1960s who are still active members of the workforce, says Klingholz, who is also Managing Director of the Berlin Institute for Population and Development. The baby boomers continue to drive the economy. At the same time, public and private expenditure for the ever-shrinking post-baby-boomer generations is declining.

The boomers will soon be retiring, however; in 2026, the first of them will reach the legal retirement age, which, starting in 2012, is gradually being raised from 65 to 67 in Germany. However, in reality most of them don’t wait that long. The average age of Germans who retired in 2013 was only 62—and statistically speaking, these people still had more than 20 years to live. Many seniors begin a new active phase in life after they retire. According to a study conducted by the Generali insurance company, seniors in Germany generally feel nearly ten years younger than their actual age. They engage in athletic activity, meet friends, do volunteer work, and take courses. These youngat- heart retirees stay independent for as long as they can: Nearly half live in their own homes or apartments—either alone or with their spouse/partner.

High life expectancy also means a longer period of time collecting retirement benefits. The statutory pension system, which directly transfers payments to pensioners, will soon face a herculean task. That’s be-cause whereas 100 people of working age currently finance around 35 retirees, this ratio will drop to 100/55 by 2045, at which time one third of the German population will be over 60. The financial expert Bernd Raffelhüschen from the University of Freiburg believes the retirement age should be aligned with increasing life expectancy in Germany—i.e. it should be raised further. Raffelhüschen believes this is a question of fairness. In an interview with the Mannheimer Morgen newspaper, he said the following: “Those who live longer can’t possibly expect that they can spend every day of this longer life in complete retirement.” Raffelhüschen says that changes first need to be made to human resources policies at many companies. For example, age discrimination is against the law in Germany, and yet Germany’s Federal Anti-Discrimination Agency reports that one out of five Germans has experienced such discrimination. Applications for credit cards or private health insurance are rejected starting at a certain age, university professors are forced to retire at 65 in many German states, and only individuals under 45 can attain civil servant status. Age discrimination particularly affects seniors looking for work, who have a much harder time finding a job than their younger counterparts. However, the majority of companies that have hired people over 50 say their experience with such employees has been positive, according to the Institute for Employment Research. These companies especially appreciate the professional experience older employees have.

Most of today’s German retirees don’t need to worry about money. Their average net monthly household income is around €1,900. Things aren’t that favorable for those who had low incomes throughout their working life, or only paid into a pension fund for a short period of time: Their incomes are sometimes below the social welfare eligibility level. This has led to the suggestion that a minimum pension be introduced in Germany.

Britta Scholz, Bargteheide bei Hamburg

Brasilien A young country grows older

Retirement at 55 and half-price seats at soccer games—it sounds like a senior citizens’ paradise, but things are nevertheless changing in South America as well

It’s actually positive developments that are changing Brazil. Families with ten or more children are becoming more of a rarity; the birth rate is declining and life expectancy is increasing. These developments are a result of the social reforms implemented in recent years. Despite the serious problems that remain in the country, the reforms have improved both health care and education. Seniors are still a minority in Brazil, but in 2055 there will be more people over 60 than under 29 in the country.

Workers, employers, and the government pay into the Brazilian social security system, which currently operates two models: People can retire either at a certain age or after paying into the system for a certain number of years. The retirement age is 60 for women and 65 for men. Many women in rural areas are also allowed to retire at 55 (men: 60). The rule for everyone is that you have to work for at least 15 years in order to be eligible for retirement benefits. Brazilians can also stop working earlier on the basis of the number of years they have paid into the system, whereby the minimum is 30 years for women and 35 years for men. In other words, Brazilians who start working early in life can retire at 50 or 55. On weekdays, Brazil’s beaches are crowded with pensioners who don’t look very old at all. Still, 42 percent of retirees are already continuing to work, at least part-time, in order to supplement their low pensions—this despite the fact that family is very important in Brazil and people don’t think twice about supporting relatives financially. However, if young people have low incomes or lose their jobs, they don’t have the means to help their parents when they grow old.

The government now plans to change the constitution and raise the retirement age to 65 with a minimum of 40 years of payments into the system. “This is a step backwards and it takes away rights that citizens have gained,” says Eduardo Fagnani, a professor of economics at the University of Campinas in the state of São Paulo. Tens of thousands of Brazilians have taken to the streets during the last few months to protest the proposed change. They want to defend the status quo, which until now has offered seniors many legally guaranteed benefits. For example, people over 60 don’t have to stand in the long lines for normal customers in supermarkets, post offices, and banks, as special checkouts and counters are available for them to use. They also generally pay only half price for movies and soccer games, for example. Moreover, public transport is free in Brazil for everyone 65 and older.

Beatriz Miranda, Rio de Janeiro