Demographic changes and retirement...
Europe attempts to reform retirement
Seems that Europe and most western democracies are facing the same retirement problems. How do you think that these issues will eventually resolve themselves?
In the U.S. it is well known that Social Security is going to bankrupt itself sometime during the boomer generation. Likewise many assume that they are safe because they are paying into a 401k, private or public pension.
As seen with the recent bear stockmarket, 401k's are yours, but they are not a defined benefit. They can evaporate down to nothing in an absolute worse-case scenario.
Public and private pensions are defined benefits. Most of them require x contribution, y years to get z result. They are supposed to be safe because they are backed by contributions both of the employer and employee. However in the private sector some companies underfund their pension plans or are bought out by other companies that raid their pension plans. Likewise some states periodically borrow from their state employees pension plan during bad budget years, or if things were to get bad enough, they would just do what all governments do, and that is change the rules. (What the article mentions several European countries are attempting to do)
What do you think will happen?
Nick
Seems that Europe and most western democracies are facing the same retirement problems. How do you think that these issues will eventually resolve themselves?
In the U.S. it is well known that Social Security is going to bankrupt itself sometime during the boomer generation. Likewise many assume that they are safe because they are paying into a 401k, private or public pension.
As seen with the recent bear stockmarket, 401k's are yours, but they are not a defined benefit. They can evaporate down to nothing in an absolute worse-case scenario.
Public and private pensions are defined benefits. Most of them require x contribution, y years to get z result. They are supposed to be safe because they are backed by contributions both of the employer and employee. However in the private sector some companies underfund their pension plans or are bought out by other companies that raid their pension plans. Likewise some states periodically borrow from their state employees pension plan during bad budget years, or if things were to get bad enough, they would just do what all governments do, and that is change the rules. (What the article mentions several European countries are attempting to do)
What do you think will happen?
Nick
Comments
Social security mostly rely on demographic issues. As people live longer and the rate of natality decrease, things get heated. In old western countries the age's pyramid tend to be inverted. The french governement and many others european countries have choosed to increase the age of retirement.
In France there is a strong opposition to this law, big corporatisms. As some journalist said, all frenchmen agree that something as to be made about retirement, but only if he do not concern himself.