We invest so that our money can hopefully grow and be sufficient for us to retire and enjoy our golden years but what if in the future, there is no such thing as retirement meaning that we work through old age. Came across this interesting video on YouTube which presents a whole new perspective on working and retirement.
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Summary of video
As we experience a longer life expectancy and falling birth rates, it means that people will be working longer as well. In a way, we will not have the same amount of youths to cover the ageing population as they enter retirement and this means that for the elderly who are still able to contribute to the society will want to do so and might have to.
Companies will need to shift away from focusing on chronological age and look at capabilities, strength and experience. The video also mentioned that there have been rampant amounts of ageism and during the pandemic, age discrimination is very much obvious.
A study by Deloitte showed that as you get older, it showed that you tend to be less willing to adapt and less willing to pitch in. However, it is important to note that age diverse teams showed more engagement and more diversity of opinions.
One interesting example in the video was an example of BMW Group Plant (Germany), they realised that the average age of the workers in 2007 was 39 and by 2017, the average age would raise to 47. The former head of the plant was concerned as older workers would take longer to recover from illnesses and have a decline in physical abilities. The company guaranteed employment to the older workers rather than forcing them into early retirement and instead did some adjustments.
They created a facility in the plant with a team consisting of individuals with a higher average age, taking the younger people out. They then work together and see what will make them work better and be comfortable. A variety of small changes were made for a small cost including a rotation system so that workers will not need to spend 8 hours in one station, providing comfortable chairs and equipment. Within 3 months, the productivity in that team increased by 7%, absenteeism rate was halved and defect rate was dropped to 0. In one year, that particular line proved to the better line than the rest.
Stopping bias against old age will benefit companies
We do see cases of ageism (both young and old but we focus more on older individuals) occurring as employers are concerned if age will affect productivity and results. However, besides that, age brings experience and according to HSBC, 15% less adults will join the workforce within the next 2 decades. The pandemic has also worsen the situation as more couples have decided not to have babies.
Companies that can put ageism aside and instead slowly introduce older workers to their facility will benefit greatly in time to come. As the population ages with lesser youths, if the older workers can continue to contribute to the society, it will also improve their physical and mental health.
Every generation has it’s own concerns
Many of our parents worked for a pretty long time with no breaks in between and life was definitely tough for my mum as her education level means there were certain obstacles for her in her job search. She also stayed long in some of the companies she worked at until she eventually felt that her body could not handle the workload and decided to retire.
For my mum’s generation it was to work hard for a certain amount of years before they could finally take a break although for some, they would have to work through retirement age as they might not have sufficient savings for their daily necessities.
Most millennials and Gen Zs would have a more comfortable life as our parents most likely were able to save money and maybe have a property that have been fully paid so we do not have to worry as much about finances when we are young. However, assets prices like properties and cars have increased substantially and with an average paycheck, it is difficult to save up and be able to afford a property in the short term.
I would think that millennials and Gen Zs will need to work through to retirement as things might not be the same where we will not have a healthy amount of youth available to cover us and with volatile prices and environment, it is really difficult to gauge when should we retire and whether the amount we have kept aside is sufficient. Of course, this is very much based on my short term findings and things might not turn out that way. Our generation is having low birth rates with couples choosing to stay DINK (double income, no kids) means we need to keep ourselves healthy both physically and mentally as we have no children to take care of us when we retire. Naturally, it means we also need more money saved as we do not have children for our retirement plan.
Well, it’s been educational for me knowing that I might need to work past retirement age, or maybe there will be no such thing as retirement just short breaks between my career. The world and companies will have to adapt as the whole dynamics of the population changes. Exciting times ahead and Happy Mid-autumn festival!
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One big difference between S'pore & many other developed countries is that our CPF is save-as-you-go versus many national pensions which are pay-as-you-go.
ReplyDeleteWith CPF, every individual saves for his/her own future retirement funding. With other pension schemes, the current workforce contributes to part or most of the payouts to current retirees via social security taxes on their monthly wages.
Hence if the current workforce shrinks & retirees increase, then there won't be enough current contributions to the pension scheme to support the payouts to the increased retirees. Either payout amounts have to decrease, or the age at which payouts start will need to increase, or both. This pension reforms is already being implemented by UK & some European countries over the next few years.
They really need to fully utilise individual savings & investing schemes like 401K or IRA (something like our SRS) to bulk up retirement adequacy. Which a lot of them don't.
Let alone saving & investing after-tax cash in normal cash accounts.
With labour shortage, think many countries especially S'pore will ramp up intake of foreign workers during the 2030s & 2040s onwards.