#retirement #RetirementAge #pensions #PensionPlans #WorkToAge70
Denmark is raising its retirement age to 70, to help shore up its version of Social Security.
Such a move is fraught with peril.
First, many occupations are physically demanding. At age 70, workers may not have all the physical characteristics to perform their jobs adequately.
Second, employers don’t want to keep people around until age 70 in any capacity. Once you get up in age, you are making a lot of money (in the employer’s eyes). They will want you to go, so they can hire someone younger and cheaper. Remember, too, that older people generally use the health insurance a lot more than younger people do, if the employer happens to provide such benefits.
In general, older workers are reliable, follow company protocol and are dedicated. That doesn’t mean they want to keep working until age 70.
Most of those who work until that age, or beyond, are high-level people – executives, celebrities etc.
Some who are still working at that age should not be: think singers.
Still, boosting pension plans is a real issue. With people having children, there are fewer younger workers contributing to most pension plans than there are retirees collecting. With these pension plans, it doesn’t matter whether people are working at age 70 AND collecting, because they are still paying in at the same time.
But, not collecting until age 70 can be a problem for a lot of workers.
Further, if Worker X is laid off by Employer Y before his or her retirement age, who will hire that person after that?
U.S. labor laws of the past were written to protect those older than 50 from undue discrimination. Of course, employers found ways around those laws if they really wanted someone gone.
If a person has a good job and loses it before his or her retirement, will he or she be forced to take a much lesser job at, say, age 60? Will an accountant have to go work in a grocery store until he or she retires?
Even though that happens sometimes, usually the ex-accountant is collecting an income from somewhere other than the store. He or she is just using the store job for pin money, social interaction etc.
But, if he or she is unable to collect an income and is forced to live off the store salary, how much of his or her life will have to go so he or she can survive?
Sell the house? Liquidate savings? None of these is a good option for the worker.
The best way to shore up retirement plans, like the U.S. Social Security system, is to tax every earned dollar during the working years.
Currently, the earnings cap is $176,000, which rises every year as average earnings increase.
The system would shore up pretty quickly if you put no cap on earnings to be taxed for Social Security. That way, executives, athletes, celebrities etc. who earn millions annually can pay their fair share and boost the system.
Perhaps there could be room for refunds if the system suddenly is flush with cash, but that is unlikely.
Forcing people to work into their elder years is not only cruel to the worker, but also impractical in the current job market.
The real problem for workers is finding ways to survive when they are forced to retire before they want to.
Peter