Retirement Timebomb(2 min read)
According to World Economic Forum, the world’s richest countries need to drastically hike their retirement age in order to prevent pension system from collapsing. The average retirement age is 65 for man and 63 for women. This will move up to at least 70 years by 2050.
Here’s the problem: People are living longer than ever, but the average retirement age has remained static. Pension funds have been unable to keep pace.
In the coming years, life expectancy will go beyond 100 years. WEF described the shortfall in pension funding and a lack of personal retirement savings as a “time bomb.”
The group estimated that just eight countries — the U.S. U.K., Japan, Canada, Australia, India, China and the Netherlands — face a combined shortfall of $400 trillion by 2050.
“We must address it now or accept that its adverse consequences will haunt future generations, putting an impossible strain on our children and grandchildren,” said WEF official Michael Drexler.
Americans face the largest gap between what they’ll need and what they’ve saved: the collective shortfall hit $28 trillion in 2015 and will rise to $137 trillion in 2050.
On the other side average return on investment is significantly lower. Which affects the retirement corpus and your set goals.
What should I do?
If you don’t want to work until 70 years, follow the steps mentioned below.
- Know your numbers, re-visit your retirement goals.
- Save your investment. Check it doesn’t go below average returns. If it is the case shift your money to other investment avenues.
- Get a financial education. Learn the basics of finance and thumb rules.
- Lower your basic cost of living.
- Stay out of debt
- You may need to increase your income.
Almost every one of us has charted out our retirement plan considering the average retirement age. It’s time to re-visit our goals.