LIFE AFTER work can be a rewarding experience, as those who featured in the series on retirement in this newspaper this week have shown.
How rewarding may depend on how prepared retirees are for the challenges and opportunities that life after work offers. Life continues in retirement, but at a slower pace in a smaller social universe and, for most, on a lower income. For the departing retiree, the time when the reward for a life at work was a notional gold watch, and a pipe and slippers enjoyed in quiet retirement is over.
And yet for many the sudden adjustment to a new daily routine after 40 years at work proves difficult. As retirees lose contact with workplace and colleagues, they may struggle to find new outlets for their energy and interests. For some retirement presents a welcome opportunity to engage with society in a different way, by involvement in voluntary or social activities; while for others, the increased leisure time is a chance to engage in further education, to develop new skills and hobbies, or to travel. Those who wish to remain economically active can choose to do so.
People are retiring earlier and, because they are much healthier, also living longer than before. Life expectancy is double what it was in the 19th century. When in 1889 Otto von Bismarck, the German chancellor, introduced the first government pension scheme, he set the retirement age at 65 years when life expectancy at birth was 45. Today the retirement years account for a far larger part of the average human lifespan: in Ireland, average life expectancy is 76 years for men and 81 for women. Society has, however, given too little thought to the implications – financial and otherwise - that a rapidly ageing population presents. The benefits and costs of a greying world – both for the individual and the State – are not, it seems, fully appreciated.
In 1960, just over a tenth of the population of the developed world was over 60: by 2050 this is projected to reach one-third. As the trend of increased life expectancy is set to continue, the implications of soaring pensions costs for the public finances are clear, both in Ireland and elsewhere. With an ageing population, the ratio of workers to retirees also changes. The result: proportionately fewer people are in the workforce to support, with their taxes, an increased number in retirement.
The outlook is hardly encouraging, either for those who have retired, or who will do so in the years ahead. Pension provision is going to become more expensive, pension benefits are likely to be reduced, and people will have to work longer, and retire later. In Ireland, the age of retirement will be raised to 66 in 2014 and to 68 in 2028. People will also have to save more for their retirement. For those who have retired, an ongoing worry of many concerns the financial sustainability of pension provision – public or private. The State pension has not been increased for a number of years, while most private sector pension funds are in significant deficit, with concerns that some may be unable to meet the pension promises they have made to members.