Retirement R
Growing Old in a Low- Growth World
Writer Cara Bouwer
No discussion about sustainable and inclusive economic development can ignore what some are terming a “retirement security crisis”. With the World Economic Forum projecting a global pension asset shortfall of US$400 trillion by 2050, inclusivity must extend to older members of society and not only focus on the youth
A 2017 paper released by the World Economic Forum (WEF) – entitled We’ll Live to 100: How Can We Afford It? – was devoted to this conundrum, in light of a world where life expectancy is increasing rapidly. Certainty about how we finance our twilight years is rapidly diminishing. As Dr Amlan Roy, Managing Director and Head of Global Demographics & Pensions at Credit Suisse, puts it: “How should the Baby Boomers deal with 30 [or] 40 years post-retirement? Equally so, how should somebody coming out of university, with 80-plus years to look forward to before they die?”
Balancing how we save for retirement and our expectations of this phase of our lives can no longer be an entirely self-focused affair. The interests of current, future and soon-to-be retirees must all be taken into account.
Speaking on the sidelines of the 2016 STOXX Innovat:Invest annual conference, Roy observed: “Roughly 22% of GDP [gross domestic product] in Europe goes on pensions, healthcare [and] long-
• Pension systems around the world are increasingly unsustainable, primarily as people tend to live longer.
• This problem has been growing for some time, but reversing it calls for deep conviction and strong will, both by policy-makers and savers.
• As risk has, in many instances, been passed from institutions to individuals, the key to success lies in changing the thinking and behaviour of these individuals.
• Changing this behaviour calls for a deep understanding of what drives decision-making.
• Rapid demographic change also has an impact on investing decision-making.
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