Active Retirement in Changing Times

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Written by C. Naseer Ahmad

The issue of retirement is one of the most vital components in the social contract of modern societies. This issue also becomes one of the motivating factors fueling mass protests across the globe, the images of which are broadcast on television screens.

To support public expectations of the social contract of yester years, governments are either raising the eligible age for retirement or changing the terms. But, as in the case of Russia where life expectancy is about 66 years, the government is meeting stiff resistance from its citizens. Protests in other countries are manifestation of public angst about the governments’ efforts to the expectations of the citizens when it comes to retirement age.

From the prism of the United Nations Sustainable Development Goals (SDGs), there are some markers to keep in mind when it comes to retirement age. For instance, there is a call for reducing poverty (SDG 1), zero hunger (SDG 2), good health and well-being (SDG4) income inequality (SDG 10) etc.  These are goals that are important at any time in life but have significant meaning in the golden years. 

Type in the word “retirement” in any search engine and you will find ideas, though a number of which might be sales pitches, to achieve a whole bunch of goals. But there are real places in Canada, the U.S. and in other places around the world where retirement is the culmination of dreams.

Victoria, British Columbia was ranked in 2017 as the Number 1 place to retire in Canada by Money Sense citing key statistics like 3.3 doctors per thousand people and average property tax of 0.82%. Sarasota, Florida (Number 1) and Washington, DC (Number 10) were ranked among the top 10 places in U.S. to retire by the U.S. News and World Report in October 2017. However, “If you’re thinking of spending your golden years abroad, Switzerland might be the right choice for you.”, according to InsiderMonkey. Ranking at the top the blog lists Canton of Appenzell Ausserrhoden, which lies at Switzerland’s northeast. Its combination of great health care, low crime rates and cheap cost of living grant it the first place on our list of best places to retire in Switzerland.

As Shana Freeman wrote in the Top 10 tips to Adjusting to Retirement, “not everybody retires by choice. Sometimes people are forced to do so due to illness or physical problems that prevent them from continuing in their careers, or financial considerations such as layoffs. Sometimes these forced or early retirements result in a big financial burden.” A bigger pot of financial resources will obviously help alleviate the financial burden in later years, whether the retirement is by choice or forced by unexpected circumstances.

Keeping the UN SDGs in perspective, it is helpful to make a comparison. Writing for Investopdia, Arthur Pinkasovitch, explained “What’s the Difference Between Retiring In Canada And America.” Pinkasovitch’s article compares the Canadian Registered Retirement Savings Plans (RRSP) with the U.S. Traditional IRA plans. He also compares the after tax plans in the two countries—Canada’s Tax-Free Savings Account (TFSA), which is fairly similar to Roth IRAs available in the U.S. In his article, Pinkasovitch also compares Canada’s Old Age Security vs. Social Security in U.S. While it is easy to get lost in the weeds of different plans, Pinkasovitch’s overview is a useful guide in understanding the offerings and the limitations in the plans of both countries.

Across the Atlantic Ocean, European Union (EU) countries which hitherto provided cradle-to-grave care are facing their own challenges even though they might offer a bit more generous plans.

While one can see obvious support for the UN SDGs for people entering later years, there is recognition of the challenges ahead. For instance, on its website the German Federal of Labor and Social Affairs states: “Demographic developments in Germany are raising enormous challenges for the country’s pension system. Fewer children are being born. At the same time, the life expectancy of pensioners is on the rise. As a result, a declining number of workers will have to finance a growing number of pensioners in the future through their pension insurance contributions. Statutory pension insurance is and will continue to be a fundamental component in retirement provisions. It ensures that insured individuals will also be able to enjoy financial security in their old age.” 

Incentives for an active retirement,” is a very informative publication from the Swiss Government which asks the important question, “who is likely to be interested and what are the challenges?” which must be “viewed from the perspective of the employees, the employees and the national economy as a whole.” Addressing the employees, the paper states that: “there is a need for action especially among the less well qualified. This group in particular will face the biggest problems in the coming years, as they will have to make do with just their pensions and savings.” The paper also calls for investment in education for those who aspire to realize their dreams via “active retirement,” because it can help boost the income potential.

Discussing the idea of active retirement, which will perhaps require changes in the legal framework as well, Swiss Ambassador to the U.S. Martin Dahinden said: “education will help solve many problems” that retirees might face. Ambassador Dahinden’s words do carry some weight on this issue as he is a Board Member of the World Demographic and Ageing Forum. By heeding his advice which is in line with UN SDGs, prospective active retirees can benefit as they approach retirement age in changing times.