DUBAI 2 July 2018: It used to be that workers retired around age 65, and then lived off of pensions, savings and family support. But now that people are healthier and living longer, retiring in their mid-60s is no longer as attractive.
Many people plan to work well into their 60s and 70s, not simply because they want to, but more likely due to financial need.
Mercer’s recent study, Healthy, Wealthy and Work-Wise: The New Imperatives for Financial Security, looked at the forces that impact financial security and beliefs about retirement. The 12-country study surveyed 7,000 adults across six age groups, as well as 600 senior executives in business and government. More than two-thirds (68%) of the respondents in the study said that they expect to keep working past a traditional retirement age.
Today, the way that people work and ‘retire’ has fundamentally changed. Employers and workers need to adapt. This is especially true in growth markets like Asia and Latin America, which are rapidly expanding and the growing middle class are optimistic about the future. However, they need the tools to make sure they can maintain their newfound, higher quality of life in later years.
Urbanization
As these aging populations face urbanized economies, this will also have an impact on the multi-generations of workers and family structures. For instance, in China, where younger generations traditionally support older generations, and with 60% of the Chinese population expected to be in an urban city by 2030, urbanization will shape the physical and cultural fabrics of this thriving country. Chinese families now face dramatically higher housing, transportation, and food prices, not to mention increasingly limited workforce mobility.
Latin America is also one of the world’s most urbanized regions (in comparison, the European Union is 74% urbanized; the East Asia and Pacific region is 50%). By 2050, UN-Habitat predicts Latin America’s cities will include 90% of the region’s population. Latin America, like China, has traditionally had a very family-based culture, so urbanization could also strain family structures and workforce mobility.
Time To Retire Retirement
Today, on average globally, people expect to spend 15-20 years in retirement. Without better planning, many will either outlive their savings or have to reduce their expected quality of life. These realities will become more acute in many growth economies, where employer sponsored retirement benefits are often immature and government pension systems are threatened by sustainability. The number of working people to retirees will drop dramatically over the next 20 years, globally falling from 1:8 today to 1:4 by 2050.
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