Great Expectations: the Retirement Mentality vs. Reality

By: Barbara Crossette
The New York Times, August 15, 1999

UNITED NATIONS-- The United States is far from alone when it comes to worrying about how to sustain a long-term Social Security system in an era of aging populations -- or how to insure that there will be enough new talent to fill the work place as fewer babies are born and more people retire. Around the world, but particularly in Europe and richer Asian nations, the situation is even more alarming, and so are the choices governments may soon have to make.

Persuading people to retire later may seem like the easiest alternative, but planners worldwide are finding that cultural and social attitudes toward leisure, family, old age and status have a great effect on policymaking. Along with economic globalization and urbanization, the idea of a hard-earned, dignified and pleasurable retirement is catching on in many countries.

"Within the space of about 100 years, people have not only accepted, but grown to believe that retirement is a right somehow, a human right almost," said Dalmer Hoskins, secretary general of the International Social Security Association in Geneva. "Working with these 150 countries that have pensions system, I'm struck more by the commonalities among them than the differences."

No one knows exactly what a decent level of retirement living is, he said, "but it's written into the constitutions of country after country."

The question, as Mr. Hoskins frames it, is whether more retirement is really what most economies really need, particularly in industrialized Europe, where populations are shrinking and aging, and most people are retiring before the age of 60 and living another 20 years or more. He suggests that in Europe and the United States, national interests and those of private enterprise may be dangerously out of sync.

"The private sector is retiring people at consistently earlier ages," he said, adding that forcing people to retire in the name of downsizing and reorganization has gone hand in hand with the shirking of responsibility for pension plans.

Big, even cosmic, ideas float around the subject of retirement. Peter G. Peterson, an investment banker and chairman of the Institute for International Economics, argued in "Gray Dawn: How the Coming Age Wave Will Transform America -- and the World" (Times Books, 1999) that, "We are confronting demographic changes so substantive that they could redefine economic and political systems in the developed countries over the next generation." Early retirement, he asserted, is already undermining the survival of developed nations.

Unless people can be persuaded to work longer into old age, say Mr. Peterson and others, like Joseph Chamie, director of the United Nations Population Division, developed countries will have to accept a loss of productivity, creativity and even general economic health.

Or they will be forced to accept waves of immigration from poorer nations, a policy Germany, other European countries and Japan would like to avoid for social and cultural reasons.

In the United States, one serious hurdle is ageism, Mr. Peterson says, reflecting on the youth culture that pervades many American companies. "Overcoming ageism will requiring ongoing education and commitment, much as overcoming racism in American work places has over the past few years," he writes. "An entire stereotype will have to be reversed, along with all the institutional rules and habits of thought that perpetuate it."

Don't bother, a lot of retirees seem to be saying, as they settle into country club retirement communities or book another cruise.

In Singapore, where the proportion of people 60 or older will rise to 26 percent from the current 10 percent in the next 30 years, the Government hopes to push the retirement age from 62 to 67. But Singaporeans, who must contribute to a national savings plan, can take their accumulated retirement package at age 55, and a fair number do, said Dr. Kanwal Jit Soin, a former independent member of Parliament.

"People think they deserve retirement by the age of 55 or 60," she said in an interview, adding that this is particularly true of older people with few or no professional qualifications or skills, born before Singapore's economy took off. "And we are also a society with strong filial ideals," said Dr. Soin, an orthopedic surgeon. "Children take care of their parents and grandparents look after their grandchildren."

With Singapore's standard of living now rivaling southern Europe's, retirees also go on cruises and vacations that they could never have afforded in earlier decades.

Singapore -- with a dominant Chinese population but a mix of people of Indian, Malay and European ancestry -- is almost alone among Asian nations in changing its immigration policy to allow more foreigners with skills to settle in the small country, really an island city-state. It also allows unskilled workers, most from poorer Asian nations, to work for limited periods, filling manual jobs that Singapore's 3.5 million people have largely outgrown through education and training for a technological future.

Japan takes a different approach, rejecting increased immigration. It tries to keep people working longer through incentives to their employers, said Linda G. Martin, president of the Population Council in New York.

"The Japanese Government has a fairly aggressive policy to encourage employers to retain older workers," she said. "It provides some financial incentives to companies that maintain a certain percentage of older employees, and sometimes older workers retire and are rehired by the same company, often with a lesser title or lower stature.

"The Japanese," she added, "are a bit ahead of the United States in how to make productive use of older people."

In the third world, where most people keep on working to survive, the formal retirement situation is very mixed, and sometimes more complicated. A survey of retirement ages by the United Nations Population Division shows the lowest ages in the poorest countries, mostly African, but also several in South Asia. Yet these are also often places where there are no pensions or other benefits, no social security systems and no subsidized health plans. A low national retirement age -- the lowest is 40 in the Solomon Islands -- often reflects short life expectancy, the pressure of younger working-age populations, or both.

In India, the employed are squeezed from both ends of the age scale, with millions of young people joining the work force every year, while older people are living longer than ever before and are beginning to demand retirement programs. Since independence in 1947, India has raised life expectancy to 63 from 39. But until very recently it retained a 58-year-old mandatory retirement age for Government employees, opening places for younger people but forcing even experienced ambassadors and key civil servants to search for work. The age has now been raised to 60.

"In countries like India and China, people can't or don't want to be reliant on their children now," said Mr. Hoskins of the International Social Security Association. But they remain in retirement limbo, waiting for governments and the private sector to act.