We recently we took a month’s holiday in the UK and discovered what we’d long suspected, were true. First that the workforce is remaining “at work” longer and that those “returning to work” after retirement, are increasing.
It is certainly true that socially, it’s nice to get out and have interaction with other humans, but I think we all suspect there is a financial incentive there too. So why is this happening?
Living in a society in which we’ve come to expect support from “cradle to grave” it may come as a surprise that this is expectation is no longer a tenable proposal. As I mentioned earlier, the cost of maintaining financial support (by way of pensions) and healthcare (by way of a health service) are unrealistic now given those used yesterday versus those used in times past.
The Guardian newspaper has quoted the number of people aged over 70 who are still working as having more than doubled in the last decade to nearly half a million.
The number of those aged over 70 who are in full- or part-time employment has been steadily rising annually for the past decade, according to new Office for National Statistics data, and reaching a peak of nearly a quarter of a million in the UK in the first quarter of this year alone – an increase of 135% since 2009.
Nearly one in 12 of those in their 70s are still working, a significant increase from the one in 22 working 10 years ago. Although the numbers may be different, from speaking with people in Canada, the US and Australia, I get the impression that a similar trend is forming.
I saw the beginning of the changes several decades ago as governmental incentives, when governments and business began to offer schemes where they would either match pension premiums between the sectors.
In Canada for instance, another approach tried, was to make retirement savings, tax deductible having the added benefit to the Government of incentivising full income disclosure to the government, since the level of tax free savings allowed was proportionate to the annual income claimed and therefore submitted for taxation.
Even such initiative at tax collection has its limitations, the major fact being, expectation. Whether we like to admit it or not, living in a society in which we’ve come to expect support from “cradle to grave” we do, and possibly rightly, expect some return on the taxes we’ve paid all our lives.
For instance, during this holiday we heard that access to the National Health Service (NHS) dental services (poor though it was anyway) was becoming increasingly difficult to achieve as more dentists were “going private” that is moving toward that more seemingly private and lucrative sector.
In actual fact, although there’s much truth in that, I believe there are other reasons. In the case of dentistry in the UK, increasing Government involvement (read – meddling and interference) along with initiatives to cut costs and force inappropriate treatment modalities on the unsuspecting (and unknowing) public is rife.
As above, this is a “two way street” and neither the government nor the dental ‘profession’ is entirely to blame.
I recall returning to the UK from a post graduate dental course in Germany about 10 years ago when, after asking for a lift to the station, I perhaps foolishly, asked about the morality of working a system (NHS) which merely paid lip service to the serious problem of gum disease.
He pointed at his car we’d now reached and pointing at himself, said to me, the unforgettable phrase, “Aston Martin”, and then pointing at me, and said, “no Aston Martin”.
I also discussed the use of the system by a dental practitioner who’s NHS workload percentage (against private services), despite being deliberately reduced over the last few years (he’d retired 6 months ago) provided a very substantial pension for life, on top of his private savings and investments which were also significant.
This is even truer of NHS doctors in practices and clinics who’s pay raises and tax deductions for their offices and clinics allow them to draw very large sums toward their retirements. These pensions are still drains on a system that has been in financial bankrupt for many years.
Interestingly, at a recent convention in Vancouver many hundred strong, attended by only doctors and lawyers, except me, there was genuine surprise by a few Canadian doctors that on top of this higher salary, UK doctors received a substantial pension upon retirement.
This may explain why so many doctors in Canada, B.C. for instance, often invest their, now capped high annual incomes in long-term real estate plans. This has to be seen in the light of the frankly enormous pensions paid to NHS administrators.
In B.C. the healthcare system is also “top heavy” and the pensions and post retirement benefits of administrators is quite frankly out of line with their input to the system.
While this is illustrated in the corporate world too, where the most obscenely large ‘payouts’ are made this increases the costs of private and therefore often perceived discretionary services, if you can call banking and insurance discretionary.
Poorly managed utilities, building and transportation, are often also mismanaged by government also adding to financial load of retirees. So combining the increasing real costs and the diminished real time and real life value of pensions, produces the perfect storm requiring the “retired seamen’s ship” to return to port for another tour of duty.
Independent Age’s, head of policy, Catherine Seymour has indicated that claimed that the rise in people working beyond 65 coincides with increases in pensioner poverty. “One in every six people – nearly two million – of pension age are now living in poverty and every day, another 226 people join that number,” she said.
“Many people who are now working in their late sixties and seventies are doing so out of necessity to pay the rent, heat their homes and afford their weekly shop,” she added.
“Everyone who wants to, should be able to retire from paid work at state pension age, and these figures suggest many people cannot afford that right. “Regardless of your belief in the state’s responsibility over the individual, there is clear reason for concern for the future.”
So what can we do about it? Let us assume the not unreasonable premise that the true cost of living will not stop rising. Also that Governments will not suddenly become fiscally and socially responsible, business savvy, capable and effective and nor will they veer away from self-serving wealth-creation both directly and indirectly following their office.
Just look at the last few British prime minister’s resultant wealth, not mention their US, Canadian and Australian counterparts. You may thank that things don’t look too rosy for the rest of us in the future. You may be right.
Now look at the presently impractical yet the historical cultural norm of “ a job for life” and the pensions “that would cover you for ever more” that we’re often assumed go with them. These are realistically, things of the past. In the corporate world people simply get repositioned, terminated or reassigned to avoid continuity and such financial future security for employees.
Many of those (not all) in the workforce accept the need to look elsewhere for their future financial needs being met – knowing that state pensions will certainly be inadequate. Incidentally, one cannot begin to comprehend the profits and self-serving actions that have likely occurred to the government’s funds ‘invested’ in private firms.
So costs go up and pensions come down, what’s next? Well unfortunately there is another twist in the tale that we mustn’t forget. As a population, we’re living longer, yet our “accepted” retirement age remains the same, or have done until recently. I believe the retirement age has increased in both Australia and the UK recently. This just compounding factor.
Well there are investments privately that one could make, true but who generally makes money at that? Is it those who peddle the products and services or those who buy? I’ll let you be the judge of that question.
Real estate, also true, often bought cheap decades ago and having seen unforeseen and incomprehensible enormous growth – and we all have stories about that one don’t we.
These incredibly expensive commodities will pass on to be sold by those least likely to want those responsibilities. Although fine if you’re a builder who will magically transform 1 family dwelling into 10 in the same space. What about those who do want them as a “home”?
Well most can’t now afford them, how long until we reflect the multi-generational mortgages seen in Japan? In Canada with foreign money being tipped into the real estate market, and in the case of Vancouver, often from less than legitimate sources overseas; housing is unaffordable to most rather than many.
This has been the case in the UK’s major cities for many years now, whether or not this will change significantly after the 2020 COVID-19 outbreak will be interesting to see.
Please forgive my cynicism but this has been “caused”, it didn’t just “happen” and while there’s little point in “crying over spilt milk” as they say, we need to see where we are before planning for the next, possibly 30 years. Even those with adequate pensions now, may not be in a similar and such a comfortable position 10-15 years from now.
Other options? Well most of us can do some income producing activity. We can return to work but perhaps on a part time basis. Age remains an issue though no matter what some say, as while those 65 plus have invaluable assets these may be old world qualities, some of which have been pushed aside.
Did you ever try to get through to Google or BT Telecom in the UK? The new world is a different animal entirely. There is crossover but it sits on an altered terrain, the topography of service, product, and distribution, etc., is changed forever.
The digital world is upon us and if we are going to re-enter the work force to supplement or even profit in order to live the lifestyle we originally foresaw all those years ago, we need to review the topography of this new work area.
I dare say there are jobs out there that require no retraining but I suspect they will become “thinner on the ground” as time progresses. Re-training can be costly to the employer who believes that the older employee will provide less length of service or dynamism during tenure than the younger employee.
Ageism is not a theoretical hurdle; it’s as real as a brick wall. So, assuming you can’t get a highly paid part-time job in an area that requires the skill set that was successful a few decades ago, where do you go from here?
I believe the future is digital, and the skills necessary can be learned so much more easily now, mainly because the skills are being dumbed down and replaced by simple and efficient yet effective alternates, just as are all the other aspects we see, yet in this case they may work for us rather than being seen as an irritation!
One of the easiest ways to initially access and grow in the digital arena remains training for affiliate marketing, simply due to the relatively insignificant initial investment. Once up and running such a business, like any other, can be scaled according to needs.
Unlike conventional businesses however, there is minimal risk and downside. While there are numerous “special skills” opportunities available online, training in the affiliate marketing niche requires little or no training, you may feel that it’s worth considering to making up what you thought you’d have versus what you do have.
Will your present funds will provide more than enough security and spending power for your entire lifetime, potentially the next 25-30 years.
Dr Stephen Bray 2020