The retirement age should be increased to at least 70 years by 2050, says a new report issued by the World Economic Forum, when a life expectancy of more than 100 years will be the norm in the United States, United Kingdom, Japan, and the other advanced economies.
The World Economic Forum’s new study – ‘We’ll Live to 100 – How Can We Afford It?‘ – warns that the six largest pension saving systems in the world – those of Canada, the US, UK, Japan, Australia, and the Netherlands – are forecast to reach a $224 trillion gap by the middle of this century.
If we add India and China to the total, the combined savings gap will reach $400 trillion – that is five times the global economy today! The gap is growing because we are living longer and saving less, say the authors, who recommend five measures to help prevent a prolonged pension crisis.
– Retirement Age: where future generations have a life expectancy of more than one century, the real retirement age should be at least seventy years by 2050.
– Support Financial Literacy Efforts: this should start when children are at school. Governments should also target vulnerable groups.
Financial literacy is the ability to understand how money works globally, how it is earned or made, how it is managed, how we should turn it into more (invest it), and donate it to help other people.
– Explain National Pension Systems: the government needs to provide clear communication on the aims of each pillar of national pension systems and the benefits for citizens.
Individuals would then have an understanding of the level of income they may expect from their government, and whether they need to ‘top-up’ with their own savings plans.