Global Views in Retirement's Future
American and overseas workers, realizing they’ll probably live to ripe old ages, agree they need to save more money to pay for their retirement. Now, they want government to help them by imposing required retirement savings during their working years.
Workers surveyed globally chose that as the best way to get needed retirement funds over three other ideas: increasing the retirement age, raising taxes or reducing pensions.
Such is one of the several stark findings of a newly released study by London-based bank HSBC titled "The Future of Retirement: What the World Wants." The study surveyed 21,000 people and 6,000 companies in 20 countries.
The study generally found a global desire by workers to have a productive and self-sufficient retirement, but that business has been slow to help them realize those wishes.
Forty-three percent of workers surveyed globally said they want to fund their own retirement through savings or by working part time during retirement. But the study also found a contradiction in responses from nearly half the surveyed global employers. While they claimed to value older workers, the study found no systems in place, such as flexible work hours, to attract or retain them.
Over the long haul, say the study’s authors, such conditions can endanger continuity of a corporate culture and result in a companywide drain of experience and skills among its workforce.
Fifty-one percent of U.S. employers surveyed in the study, for instance, said they saw no urgency to recruit older workers, while 33 percent of overseas companies responded likewise. Thirty-one percent of U.S. employers responded with "no need," as did 30 percent of global employers.
"It’s surprising," says Geoffrey Brooks, New York City-based retirement services chief for
HSBC Bank USA. "I expected employers would more actively try to keep older workers."
But employers, says Brooks, may be well advised to "walk the walk" to meet the needs of older workers. The reason, he says, is the radically changing face of global demographics. They show the huge baby boomer generation nearing retirement happening concurrently with reduction in global fertility rates. The long-term effect, he says, is a shortage of younger workers coming into the workplace to replace experienced workers ready to retire.
"They’re not feeling that pain yet," Brooks says. But over the next three to five years, when a much larger chunk of the boomer generation has retired, he predicts employers will be forced to accommodate older workers.
Meanwhile, the HSBC study revealed for the first time global agreement among workers on their need for government help in forcing them to save for retirement, Brooks says.
The expectations of longer lives, along with limitations of current retirement savings plans are the biggest factors. Private-sector pensions are being phased out in the United States and United Kingdom, and have become essentially for public-sector workers only.
Private employment retirement plans such as 401(k)s and individual retirement accounts are noncompulsory savings plans in the U.S. Meanwhile, the U.S. government takes Social Security from workers’ checks to enable their receipt of retirement payments, but the system seems to generate only supplemental funding. Sarah Harper, director of the Oxford Institute of Ageing in England, says the HSBC study shows workers are now aware of their longevity, and of the need for lining up adequate retirement funds. Opting for compulsory savings, she adds, is the workers’ admission that they aren’t very good at saving money.
Politicians in Europe have been reluctant to introduce such savings law, fearing a backlash, she says. "But now, one-third of the population is saying, ‘We need help.’ So we’re saying don’t be scared to push (retirement) savings."
Like Brooks, Harper stresses that the demographics of the world are undergoing a fundamental and profound shift. But, she says, the biggest factor isn’t the aging boomer workforce. It’s because worldwide, women are having fewer babies, or opting against motherhood outright, as they pursue careers.
That has triggered a global population shift of more people over age 60 than there are under age 15. This unprecedented trend began 10 to 15 years ago, she says, as women worldwide saw and pursued more workplace options.
"That shift," Harper says, "is here to stay."