I sometimes have this fantasy that I am helping the police as a witness to an incident in the Suffolk market town where I now live.
“Can you describe the couple in question please, Sir?”
“Well, officer, they were in their late middle age, smartly but casually dressed. They both had white hair.”
“That doesn’t exactly narrow it down much, does it, Sir?”
No, not really, officer. In the town where I live, it seems like every other person on the street answers to that description. There are any number of well-heeled, well-preserved retirees, plainly living life as they choose.
Many will be beneficiaries of what I call the 20-40-30 life. In earlier times, you left school at 15, worked until you were 65 and probably died not long after. Now, if you are lucky – and I stress, these are the lucky ones – you are in education for 20 or so years, work for 40, take early retirement as I did and have the prospect of another 30 years or so doing pretty much what you want.
This is a massive social change, and it partly explains that half a million-sized hole in the workplace I have written about here before. It is, for those lucky ones, a gift unimaginable for those earlier workers.
All this raises any number of problems and possibilities and no one, to my knowledge, has tried to tackle these. As I wrote the other day about ageing rockers, some people can seemingly go on forever, doing what they want.
But if you are a well-paid, professional white-collar worker, with you and your employer paying into a pension for 35 or 40 years, it is likely, when you reach your early 60s, that you can afford to retire in some comfort. This is particularly true of public sector workers, who are more likely to have more generous final salary pensions.
Retirement challenges and opportunities
The problems? First, the unaffordability of the state pension. There was a suggestion from an academic earlier this year that the age at which you draw a state pension might have to rise to 71.
The reasons, obviously, are rising life expectancy and a falling birth rate which limits the amount the state can raise in taxes to fund that state pension. Something, at some stage, is going to have to give – and this is true across the developed world.
All the numbers are in the piece. By 2028, you will have to live to 67 to draw a state pension. Raising the age further will mean more people will die before they do so, providing an inevitable saving to the public finances.
Yet raising the state pension age further is unspeakably cruel. This is because of the paradox that those more able to retire early would be more able to work longer, while the converse is also true.
Those like me who did a sedentary, professional job are physically able to work longer, but as I said earlier, we are more likely to be able to retire early. Those doing hard manual labour are less likely to have attractive pensions and so will have to go on. To 71? Or just work until you drop?
One option canvassed is to means test the state pension.
Those with an attractive private pension would get less from the state, the argument goes. Far be it from me to disagree with a former member of the Bank of England’s Monetary Policy Committee, but this seems to set up what he and his fellow economists would call a perverse disincentive.
If you tell people that the more they save for their old age, the less they will get from the state – well, what then? There is an incentive to save less. This is particularly true for the self-employed, who have to set aside a hefty proportion of their earnings, far more than those of us with an employer paying a chunk of our salary into the company pension scheme.
Some on the far right, the usual libertarian think-tanks, want to scrap the state pension, a hand-out, they say. Save if you can, otherwise work until you drop. Pensioners are, by definition, economically unproductive.
Other more moderate voices suggest scrapping the “triple lock”, which protects pensions from the effects of inflation. This would inevitably erode the value of the state pension in real terms over the years.
These two ideas have one huge problem. They are not easy to sell to pensioners, who tend to vote more often than younger people. Not a good sell on the doorstep in the forthcoming general election, then.
Rethinking retirement
What is the solution? We have to rethink entirely what retirement means. To many, it means liberation to do what you want at last. We have just bought a boat. (Our friends have been advised to avoid the River Deben for a couple of months, and don’t get too close to the riverbank either.)
Two old school friends of mine are in a band. They played Glastonbury last year. Now, that is living the life.
Plainly, in looking forward to those potential three decades of freedom, those bonus years for the very lucky ones, you have to think what you will do to fill them, rather than vegetating in front of “Escape To The Country”. (Or I suppose, if property porn really floats your boat…)
My local grocer has someone working behind the till who is in his mid-80s. He tells me he does it two days a week, with shorter hours in the winter because he hates driving in the dark. His employer is flexible enough to allow this.
I really admire that employer. This is a win-win for all. He gets out of the house and does something productive, which all the studies suggest increases life span.
His employer gets someone who can communicate well with more elderly customers. He gets in some extra income and contributes tax revenues on this. What is not to like?
It also helps plug that half a million gap in the workforce. The solution is entirely down to business, and employers. Firms such as B&Q have long employed older workers.
All this may require a degree of flexibility, allowing hours that suit older employees and also some working from home. It is, I think, the way forward. Everyone wins, and those bonus years are better filled and better remunerated.
For the lucky ones, as I say.
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