#7: We’re Headed in the Wrong Direction: Retirement Policy

I know things cost money. I am not a pie-in-the-sky socialist. I am very much aware that money has to be earned, economies need to grow, and benefits do not grow on trees. I grew up in East Germany under Socialism/Communism, and I do not want that back, under no circumstances.

There are some things though that are starting to worry me on a systems-wide level, and one of those issues is retirement.

It used to be that retirement meant that you would have money to spend. Maybe I remember wrongly, but I distinctly remember Western European and American senior citizens travelling around the world with apparently no care in the world, spending money on their kids and grandkids, building inheritances and nest eggs. Surely, this was a middle and upper class phenomenon, and poverty in old age has always been real in many cases. But it surely seems that whatever leisure and luxuries the past may have held, there will certainly be less of that in the future.

Already now, senior citizens frequently work in retail professions to make some extra money on the side, probably because their retirement benefits are not making ends meet. But this is just the beginning, and my Generation (Gen X) already seems to know that we’ll probably not have much to live for, and Generations Y (Millennials) to Z (does that mean the last?) probably don’t even want to know what will happen.

Again, I know that retirement and pension funds cost money, but this is cutting money at the wrong end.

In the “good old days”, old age meant “good luck” – if you were not incredibly rich or important, you would suffer. Older people doing well is an achievement of the late 19th and the 20th century.

Older people doing well means they can spend money on future generations, that they will spend money, period. Not investing in them is a deeply counter-productive thing to do, as it damages the entire fabric of inter-generational support. Typically, we hear the narrative that the working younger people support the older generations in retirement. Sure, tax-wise that seems not wrong. But the reverse is even more important: Inter-generational wealth and stability can only exist if parents and grandparents can actually support their offspring, and build wealth over time, and even babysit.

The trajectory we seem to be following throughout most if not all Western countries is pernicious and destructive, and needs to change. I certainly hope it does.