Retirement planning can never be effective if a one-size-fits-all model is applied. The traditional three-stage life of school, work and retirement no longer functions in an age of unprecedented longevity and shifting work and health outcomes. Current retirement and pension systems are not equipped for today’s social and economic realities.
Most people’s retirement plans are too vague and only begin to appear on their radar when it is too late to make adjustments. Some positive developments will make the financial aspects of retirement less daunting for many.
More women are joining the workforce, helping to build the retirement nest eggs that will ease financial pressures in later life. Many opt to work for longer beyond the statutory retirement age because they need to ensure financial resilience in later life. Others still feel healthy and productive and may not want to give up their sense of community at work.
Still, far too many people do not realise the financial and health cost challenges that they will face when they retire until it is too late. Poverty among the retired is often an avoidable risk that can be defused by proper planning.
Unfortunately, the main contributors to creating awareness about these challenges are operators in the financial services sector. Operators in this sector do not do this through a sense of altruism and commitment to the well-being of society. They do it because they see it as an opportunity to improve their bottom line by selling investment products.
The scarce political involvement in not helping people understand the dynamics that will shape the future of retirement. Understandably, few political leaders buy into the recommendations of policymakers to raise the retirement age to cater for improving longevity and the strains this puts on the public coffers.
Similarly, little effort is made to make employability in older age a reality for those who want to remain active for as long as they are healthy. Some political leaders believe they are promoting healthy ageing by offering part-time university courses for retired people who want to know more about the history of medieval art or other exotic subjects.
The realities that some families face are more challenging. People might take a break from work to raise children, care for sick relatives, or go back to school, even in mid-life, to learn a new skill to advance in or change their career. Older adults might want to take on part-time on-demand jobs or choose freelance work that lets them set their own schedule. Labour market legislation and practices are too rigid. They deprive some people of the flexibility they need to plan their retirement.
More women are joining the workforce, helping to build the retirement nest eggs that will ease financial pressures in later life
Despite the current economic and demographic challenges, the present circumstances create opportunities to reform today’s retirement and pension processes that were not designed for the reality of people living longer, healthier lives. Planning for up to 30 years of retirement can be easier if more flexibility and innovation are hardwired in labour market policies and practices.
Policymakers need to be more innovative. They need to make it easier for older adults to find employment if they want to work beyond retirement age. Sectors from catering to tourism and travel complain of a shortage of workers, exacerbated by the shortage of younger people who want to work in these sectors.
The private sector needs to be more inclusive and equitable. Relying on imported Third World low-cost labour is not sustainable or even fair. We need to build business plans that respect the dignity of all workers by granting them decent work conditions.
Financial institutions must go beyond marketing their services to high-net-worth individuals. Gig workers, stay-at-home mothers, and lower-income workers all need saving options. These institutions will do well to update their financial literacy plans for this new demographic reality.
Individuals need to understand the risks of rampant consumerism and the urge for instant gratification. Saving for a rainy day may sound like expired old-fashioned wisdom. Still, it can keep many free from the risk of poverty in later life.
People also need to be bolder and not be afraid to pivot change in their careers or learn new skills, especially if their employers fail to provide opportunities for continuous career development.
Society must be kinder by stopping ageist stereotypes that depict the current demographic challenges as an unsurmountable problem.
Policymakers and employers need to recognise the importance of jobs for older adults, promote retraining and flexible work schedules that accommodate their needs and eliminate work disincentives at older ages.