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Is retirement just a pipedream for my generation?

Posted by: Suzi Parkinson
16/02/2017

 

It is likely that a high number of generation Y (anyone born after 1980) and a large majority of generation Z (anyone born after 2000) will live to be 100 years old. And based on this, further generations will have a higher chance of living even longer. According to the Institute of Demography, for every 10 years since the beginning of the 19th century life expectancy has increased by 2 and a half years. This equates to an extra 6-8 hours everyday.

Traditionally, life has been split into 3 stages – education, work and retirement; but this outlook may need to change if retirement is expected to end up being the same length of time as working life is now. We used to think that middle aged started around 35, now it’s recognised as starting at around 40 but even that’s beginning to increase to early 50s. Whereas 60+ used to be seen as being “over the hill” but that’s no longer the case, with people having a “new lease of life” at 60.

So how might this longevity impact us and how are we going to fund it?

With rising living costs and salaries in real terms at an all time low, is it even possible to save enough money for retirement without seriously reducing our quality of life? Is our only option to work a lot longer in order to afford it? In 2011 the default retirement age was fully abolished in the UK, which stopped employers being able to force workers to leave employment at the age of 65.

An advantage of having a much longer working life is that it won’t matter as much if you need to take time out. This is especially good news for women who traditionally (although not always) take on the caregiver role to look after children and/or ageing parents and such situations result in lost earnings, pension contributions and savings. But if your career is going to last 60+ years, you can make up that loss. You could even take a gap year – who says they are for younger generations only? However, with the constant speed and rise of technology, taking a few years out entirely could change your career path or be detrimental to your livelihood.

One option is working part-time to provide a regular income (let’s be honest, the state pension is likely to be abolished by the time we retire and even if it isn’t it will be little more than spare change). Part-time work could also act as a transitioning period between work and retirement to help make the change less stressful or significant and could be beneficial to health.

This “longevity risk” (the risk that people will live longer than expected) is currently a hot topic with the potential of becoming a major economic crisis. An ageing population puts a strain on welfare, the NHS, public funds and the planet in general. A major disadvantage of an ageing population is the rise of certain diseases such as dementia. Although recent research has shown a correlation between later retirement and lower mortality rates. The research reported that those retiring at 66 had an 11% lower mortality rate than those who retired at 65. Suggesting later retirement may actually delay the decline of physical and cognitive functioning because working life keeps your mind and body active whilst also keeping you socially engaged; although we need to bear in mind that correlation does not prove causation. People living longer also has an impact on the next generation with regards to job opportunities, housing issues and resources to name a few. It is not beyond belief that public recourse will be overhauled entirely in the next few decades to cope with the increasing demand, which may mean more taxes from us all to pay for the NHS (putting even further strain on our incomes) or possibly even a hybrid of private and public care. 

My generation is encouraged to plan for retirement, encouraged to get on the property ladder, encouraged to save (although interest rates are at an all time low and don't keep pace with inflation so they return as much as a piggy bank would) and encouraged to go and "live your life" and "see the world". This is considered as all good advice, but it creates a huge amount of pressure and worry when the fact is, with the progressively changing political and technological landscapes, we are finding it harder and harder to predict the outcomes that help us manage the future. So many of my friends have given up the dream of ever being able to buy a house or retire because it's highly unrealistic against what they earn or will earn in the future. So although in theory it's great planning as much as you can for the lifestyle you want in retirement,  in practice my generation won't have the comfy retirement my parents had from a pension, so we need to consider other avenues to pay for our ever extending lifespan. My generation is also likely to be looking after their ageing parents thus putting a further strain on finances and could even mean that full retirement will cease to exist for those of us under 30.  

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