Why Retirement is Important
Retirement was not set up so you could actually enjoy the fruits of your labours. This was an intention to get you to part with your money. Retirement is important for a whole lot of other economic reasons.
Retirement Funds
Retirement funds make up a large percentage of the stock market anywhere in the world. According to the Global Pension Assets Study 2017 retirement investments account for 62% of the GDP of 22 countries that were studied.
In dollar terms it’s something like $32 TRILLION and that was in 2017 so it’s probably a lot more. There is a lot riding on these funds and not just your retirement money. They employ hundreds of thousands of people to manage and administer the funds the cost of which all comes out of your retirement account.
Retirement funds drive a large chunk of the stock market and can affect stock market performance with the timing of their trades either negatively or positively.
So without the retirement funds themselves, the stock market would be nowhere near as lucrative or perhaps volatile, as all that money wouldn’t be in the stock market at all without the funds.
Workforce
The workforce is ageing rapidly with one in three people expected to be over 55 in the coming years. This brings a whole new array of problems to the workforce which need to be managed by large and small businesses. This article suggests that re-training will be needed for the ageing workforce with further discussion surrounding the 100 year life.
Moreover, where previously there had been room made for the younger generations coming into the workforce with the retirement of the older generation, this is no longer the case. The younger generations are finding it more and more difficult to enter the workforce as people hold onto their jobs for many years longer than anticipated 20 years ago.
There is also some concern that an ageing workforce will have significant implications on the productivity targets of the workforce.
Lifestyle and Infrastructure Planning
The burden on infrastructure that was planned 20 years ago is now becoming unnecessary and the changes necessary to accommodate the ageing workforce are another 20 years away. More people are driving and taking public transport, holding their homes longer creating even more demand for new housing on less and less land.
The idea that you could retire on your house that you lived in for 50 years is now looking shaky as the younger generations cannot afford or do not want to tie themselves down with a 30 year mortgage as the generation before did. So who will be the buyers of these properties and will you get what you planned for?
Summary
Retirement is an industry that has been manipulated by many sectors of the community. However it is now up to the individual to determine how, when and if they retire. What is the lifestyle you want and how will you fund it? The security of one employer forever is long gone and the security of the pension fund itself is at the mercy of the markets, driven in part by the retirement funds.
It’s important that we all take responsibility for our own retirements and plan accordingly so we can determine where and how we live and if or when we stop working.
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