The Retirement Age is Changing Globally. Workers are Retiring Later. Here’s Why

Sep 03, 2018 | 12 months ago | Read Time: 3 minutes | By iKnowledge Team

As the nature of work and lifestyles and the economy and the world around us changes, so does the nature of retirement. More and more, across the globe people are retiring later than ever before. There are many reasons for this delayed retirement and prolonged work life. For some it is a choice to delay retirement, for others it’s a compulsion. Elimination of traditionally offered social security guarantee and benefits with the failure of the modern welfare states, changed nature of pension, decline of retiree health insurance, increased education, health and longevity, less physically demanding jobs all contribute to the increase in retirement age (see the chart provided).

Current Population Survey

Image Source: Alicia H. Munnell, Market Watch

The urbanized and globalized economy we live with today is one of the main reasons for the increase in retirement age. There’s a disruptive change in how people work and retire today. With the changing nature of jobs and the prevalence of the gig-economy or freelance or part time work, not everyone gets a pension.  Without a secure income stream not many people want to face retirement. Then the worker needs to be in charge of the pension plans, choosing products such as the Aegon Life iGuarantee Plan, which is a secure investment plan with guaranteed returns as well as a death benefit.  Moreover, there is no medical check-up, which leads to a hassle free sign up process that is very quick. Premiums paid are eligible for tax benefits, making this a cost effective plan.

Where previously the grown children used to support their seniors in the family, urbanization (e.g., EU is 74% urbanized; East Asia & Pacific is 50% urbanized), nuclearization of families and migration all contribute to changes in the age and nature of retirement.

While retirement used to be around the age of 65 with retirees living off of pensions, savings and family support. Now increased life expectancy and innovative healthcare solutions means that people are postponing retirement to stay engaged. Even when they take formal retirement from their careers, people are continuing to work for a living are senior interns and consultants or on contract, as shown in the movie The Intern starring Robert De Niro. Hence retirement the mid-60s is no longer as attractive. People are working well into their 60s and 70s. Women of course are bucking the trend, while men’s retirement age has increased recently, retirement age of women is still holding steady.

According to “Healthy, Wealthy and Work-Wise: The New Imperatives for Financial Security,” a recent study Mercer, 68% of respondents said that they expect to keep working past the traditional retirement age. The quest for financial security and wide-ranging health cover in the golden years is keeping a significant proportion of the working population longer in the workforce. Inflation and exchange rate problems, not to mention a late start in retirement planning and saving are other reasons people feel forced to prolong their work life and delay retirement. It becomes apparent that you will need a lot more to secure your retirement.

There is also the desire to maintain your well-earned lifestyle, cushion unforeseen emergencies and health problems, and indulge in luxury holidays one didn’t have time for when part of the daily grind. Therefore, your retirement savings has to be adequate and your retirement plan has to be robust. The quest to boost retirement savings is a key factor in delaying retirement.

So how can you secure your post-retirement life? How can you stay in charge of your own retirement? Knowledge is the first step. One needs access to the right information. This can help you secure a financially secure and golden retirement. Guaranteed income retirement plans such as those offered by Aegon Life Insurance can assure you an independent post-retirement life.

If you want to buck the global trend of a delayed retirement then you need a sound retirement strategy that gets you saving as early in your career as possible to secure your post- retirement life. On average now, people expect to spend anywhere between fifteen to twenty years in retirement, even after a delayed retirement. This calls for better retirement planning so as to ensure that people don’t outlive their savings or compromise on the expected quality of post-retirement life.

You can get tax breaks if you have a life insurance policy as well, provided you have add-ons like medical insurance and critical illness riders.

Advt. no.: II/Jul 2018/4240


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