Month: August 2010

The End of Retirement

A while back, I wrote about the coming en masse Boomer (1943-1960) retirement and how it is likely to affect the economy. Today, after reading the post and comments about The Grey Tsunami over at Down To Earth, I’d like to take that thought process one step further.

I’ve previously discussed how populations in industrialised nations are ageing. As an example, the number of people aged 65 or older in Australia will increase from 2.9 million to an estimated 7.4 million by 2049. The percentages are similar for most of the wealthy nations.

Additionally, mounting government debt poses a painful choice for developed countries; either a deep reordering of public expectations about everything from the retirement age to tax rates, or slower growth. In all likelyhood, it will be both.

Raising retirement age

The growth in the proportion of older people has major implications for the aged pension and for Federal and State budgets if taxation revenues were to shrink. If we were to ensure the proportion of five people of working age for every one retired was maintained, retirement ages would have to be lifted dramatically in the decades to come. There is no question that difficult decisions will be required.

To keep the economy moving in the face of a greying population, the Business Council of Australia (BCA) has recently called for the retirement age to be raised to 73 by 2049. I’ll be 72 in 2049, so this will very much affect the younger Gen X (1961-1981) and Millennials (1982-??).

The best way to deal with this issue ( from the government’s perspective),  is to raise the retirement age so you can’t begin drawing your old age pension till later …….preferably not before you die. This keeps you paying into the system longer without drawing any benefits.

Superannuation (401K) will not save us

It turns out Australians face a collective $695 billion “shortfall” between what they’ll have to retire and what they need. A professor at the National Centre for Social and Economic Modeling pointed out the following in an Age article:

  • The average super account balance for males aged 60 to 64 is $135,000.
  • For females it is $62,000.

But, apparently, the average isn’t terribly descriptive, because of a minority with very large Super balances. So, let’s check out the medians instead.

  • The median balance for men is $33,000
  • The median balance for women is a big fat 0.

So, half of women have no super. Please let that sink in. Here is the link to the article again. It’s still 0 when you read it a second time. Of course, this is misleading, as it includes those women well before retirement.

  • the median account for men aged 50-59 is $44,000
  • the median account for women aged 50-59 is $10,000

Retiring on $10,000 in the next few years isn’t an attractive proposition. But wait, there’s more. The professor reckons that “the old assumption that people would retire debt-free will not hold true for the next generation of retirees.” They have debt too. That means interest as well.

This is the reason that Governments of wealthy nations are worried. We can see this in Australia, where the Government is encouraging mass immigration and encouraging a new baby boom through the ‘baby bonus’.

The Solution?

So what happens if the government raises the retirement age to the point where it’s likely that you’ll die before you can retire? What happens if the purchasing power of your Superannuation (401K) is steadily eaten away by a sluggish economy and rising prices? Assuming you can keep a job, do you just keep working until you die?

Personally, I am not expecting to ever see a cent from the government for my retirement. I’m not even expecting to see any money from my Superannuation. After all, it relies on the economy growing steadily for the next 40 years and I have my doubts about that.

For me, the answer is to become as resilient and self-sufficient as possible. Realigning expectations to this reality, getting out of debt, reducing expenses, finding work that I love and will enjoy doing into my old age. These are all maxims of voluntary simplicity and I hope they will all serve well to deliver a dignified ‘semi-retirement’. The notion that we can all play lawns bowls and jetset around the world during our final years will not last much longer.

To end, I wanted to include some of the comments from the post, The Grey Tsunami over at Down To Earth as I think they amplify my thoughts on this topic.

What are your thoughts?

This is an important message. My husband and I are in our early 30’s, and we understand that here in the US, there will be no social security for us, and that the age of retirement for those who do receive a pension might well be 70. Simple living, with an emphasis on health in terms of meals and lifestyle are going to be the only comfort for us and others like us. ~ The Simple Poppy

This is one big reason why I am so glad I stepped forward into this life while I am young. This issue actually makes my DH angry, because he has believed for a long time that we will not get this money back. And here in Canada, it’s a lot of money. My goal is to have an entirely self-sufficient home, where we can live without electricity, gas, even plumbing if need be, and that it be modern and beautiful at the same time. My DH is making me a solar oven and a cob oven so that we will have two alternatives from the modern oven. Things in my home are getting slowly replaced- the essentials, so that if we don’t have money for them, we aren’t in the bind. We aren’t counting on a pension, we never were. We are preparing. I’m glad you raised this issue though- we need to all know we cannot rely on the government to take care of us, and take steps now. ~ The Girl in the Pink Dress

I’m 43, and hubby is 46. I was told by my financial planner not to count on any social security or state pension being available when it came time to retire. It was all up to me. So, we have a house with no mortgage, have no debts, and are saving, saving, saving and becoming self sufficient as much as possible. The government coffers are bare, and it is up to us to fill them ourselves if we don’t want to be working until we drop. ~ AM of the bread

The objectives of the welfare state were undoubtedly noble and humanitarian, but the results have been disastrous. As harsh as it may sound, I think it would have been better if entitlements like the aged pension had never been enacted in the first place. And I didn’t need the benefit of hindsight to help me arrive at this conclusion. Instead of incentivising self-reliance, hard work and financial responsibility, what we have now is a system which actively encourages dependency and tells us that becoming a ward of the state is something to which we should all aspire. Anyone listening to talk-radio in the lead-up to the recent federal election (in Australia) would have heard what this does to a person’s moral compass. Instead of expressing concern for the country as a whole and acknowledging that profligate spending is unsustainable and destabilising (see Greece), most callers were only interested in what was in it for them personally…and to hell with where this leaves their grandchildren and all future generations. Obviously the current system cannot be abolished overnight and the transition from welfare dependency to self-reliance needs to be fair and just, but the fabric of our society will be made all the stronger once the aged pension is all but eliminated (some kind of safety net will no doubt still be available). ~ Simone

Weekend Without Oil

If you prefer to walk or bike instead of using a car, enjoy being outside, use reusable bags, avoid plastic bottles, eat meat sparingly or not at all, research makeup and cosmetic products for safety, carry a refillable water bottle, and generally avoid buying crap you don’t need and using the stuff you do have as long as it is useful, then you are well on your way to successfully completing the Weekend Without Oil challenge.

Call to Action

On August 21st and 22nd, commit to these 11 actions!

  1. Walk or ride your bike: Avoid using cars and if you must, always try to carpool. Transportation accounts for 40 percent of our petroleum consumption and is easily one of the biggest areas we need to improve upon.
  2. Enjoy the outdoors: Avoid buying new sporting equipment, since oil makes up nearly 25% of rubber. Footballs or basketballs, for example, can last for many years and used equipment is often just as good and will reduce demand for oil needed to make new rubber.
  3. Use reusable bags: Avoid disposable plastic. Plastic bags are a huge waste for very little benefit. Nearly 10 percent of U.S. oil consumption, approximately 2 million barrels a day, is used to make plastic products alone.
  4. Be conscious about what you eat that weekend: You can reduce oil demand by changing your diet to eat less meat, more local foods that require less transportation and organic food, which doesn’t use petro-based fertilizers.
  5. Don’t buy new make-up that weekend: The majority of cosmetics are petroleum-based, including lip gloss, face powder, nail polish, and more. So avoid buying new make-up products this weekend and research the brands when you purchase in the future.
  6. Drink tap water: Avoid beverages bottled in disposable plastic, they make up nearly 1.5 million tons of plastic waste per year, so get a reusable bottle and fill it up.
  7. Make your electronic gadgets last: Avoid buying new electronics. Electronics take a lot of oil to produce and the gadgets you already have can last much longer than the rate at which new ones are released.
  8. Go to the movies or stream them on Hulu: Avoid buying new DVDs/Blu-Rays, as oil is a key ingredient in their production, packaging and shipping.
  9. Skip buying new clothes that weekend: Swap clothes with friends or check out the local vintage store. The less new clothes you buy the less oil is used in the manufacturing process and transportation.
  10. Head to your local library or read online: Avoid using a printer and buying printed material including daily newspapers. Printing doesn’t just waste paper, nearly 100,000 gallons of ink each day is used on daily newspapers alone.
  11. Spread the word! Get 3 friends to sign the pledge and help raise awareness on ways they can help reduce their dependence on oil-related products.

Who’s in?

Photo by: identity chris is

More content now on Facebook

 

I’m finding lately that I’m doing more reading than writing, and I’m not updating this blog as often as I’d like. I do however, have lots of great links to share and this blog just doesn’t seem to be the right platform for it. I’ve therefore decided to create a new Facebook page. Here’s what it’s about:

Energy depletion, environmental destruction and economic crises are the biggest three issues of our time and they are converging to a point where the next two decades are unlikely to be anything like the last.Here I’ll discuss the great challenges we can expect to experience over the coming decades and provide links to relevant news articles which discuss these issues. I’ll also link to people and organisations doing the good work of moving us towards a more resilient, sustainable and just society.

If you are on Facebook and would like to receive daily links please ‘Like’ this new page. I’d love to create a parallel community over there.

Becoming A Good Human 

Alaska…oh how I love thee…

Brendan and I are currently in Alaska visiting with friends. We’ve only been here for two days and I already feel like a new person. I start the day out drinking coffee overlooking the mountains and Eagle River where Bald Eagles have made a nest and swoop and soar on the air currents.

Both days we’ve been out hiking and the fresh, crisp is a welcome change. Yesterday’s hike took over three hours once we stopped at the river and ate some lunch which enjoying the view. This morning I went for a mountain bike ride while Brendan ran and we are soon off for another hike.

I just wanted to provide a quick update to let you know that I am now feeling much better after feeling horrible for the last month. I think visiting with good friends and some quality time in nature to thank for that.

Photo by: Douglas Brown