Retirement

We all spend the first years of our lives as dependants, economically unproductive people who cannot provide for our needs. Many of us end our lives as dependants, and we use the word retirement to describe that period at the end of our lives during which we again are economically unproductive, though usually not altogether unproductive.

At any given moment, the means of paying for the living-costs of retired people can be derived only from wealth that is being generated or has previously been generated. We can debate whether that wealth is to be channelled through state spending on state pensions (financed by taxation and/or borrowing and/or the proceeds of privatisations and/or the sale of gold ingots stored in the vaults); whether the wealth is to be tapped by the liquidation of retired people’s accumulated assets, or by borrowing on the security of those assets; whether the wealth is to be accessed via the returns on the investments of pension schemes, or via current contributions to pension schemes, or via the payment of annuities that retired people have bought; whether the wealth is to be donated from the earnings and savings of the supportive families and charitable friends of retired people. The question as to which option or options should be used is an important question, but the options are a secondary matter. The wealth must first be there.

dirbtnIt is not clear how enough wealth will be generated , or can be generated, to enable the predicted population of retired people in Western societies to enjoy a comfortable standard of material living. This problem is related to the current economic crisis, but would still have arisen if no such crisis had occurred.

If, as things stand, not enough wealth will be generated or can be generated, something has to give.

qubtnbarShould we abandon the concept of retirement, as presently understood? That is to say, should those who at present retire, but who could still work, continue at work until the end of their lives or nearly the end? If so, will there be enough wealth-creating jobs that older people can reasonably be expected to do, and will they be happy to do them?

Should we make the creation of wealth (not necessarily material wealth, but marketable wealth as distinct from other types of wealth) a higher priority in Western societies? If so, by what means? On what timescale could it be done? What goals and activities would be relegated to a lower priority?

Should we curb our ambitions for a comfortable standard of material living? That is to say, should we:

  • settle for less during our productive years, so that those who have retired may live comfortably? or
  • settle for a subsistence standard of material living in our retirement?

Can it be expected that many people in Western societies would voluntarily make such sacrifices?

We can postulate hypothetical changes that (according to some schools of economic thought) might mitigate the problem of creating enough wealth to fund comfortable retirement, but is any of the changes practicable now? Which of those hypothetical changes would give rise to the least bad negative externalities? If those changes had been practicable in the recent past, would they not have been implemented? Could any of them become practicable without the world having first to become a very different place?

Alternatively, if we cannot bring ourselves to take action, will the powers-that-be grasp the nettle for us? Will they decide that people who reach a certain age must be deprived of all economic support from the state? Or will the powers-that-be make real what has been foreshadowed in works of dystopian fiction: on reaching a certain age or a certain degree of infirmity, citizens must be deprived of medical treatment, or must in some other way be subjected to euthanasia?

[Original posting 30 September 2009]

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