Why Australia should increase the retirement age to 70

 Many countries are in the process of increasing or have already increased their retirement age for the national pension system. The rapid population progress and aging have amplified the rising concerns about the pursuit of the basic pension system sustainability in Australia. Ideally, increasing the retirement age is considered an important way for the government to maintain a long-term financial sustainability that has become a main policy of choice in Australia (Axelrad and Mahoney, 2017). There are various reasons as to why the retirement age should be increased to 70. Thus, raising the pension age to 70 is sensible.

Social security concerns

The idea of increasing the retirement age because of the concerns of social security have not been thought in the past until the life expectancy has increased (Vogel, Ludwig and Börsch-Supan, 2017). As a matter of fact, there are more baby boomers that are getting into the retirement age hence drawing the social security and fewer people get to pay into the system which has gradually grown bankrupt leading to the reduced amount of social security benefits for the retirees (Whitman, 2014). For instance, the United States is planning to increase its pension age to 66 years by 2020. The decision made on increasing the pension age is related to social security concerns for the country. Ideally, the average life expectancy has increased, thus, raising the retirement age will not only lead to benefits of the social security system but also but also the well-being and health of people in Australia in the future generations (Axelrad and Mahoney, 2017). It is important to understand that increasing the retirement age will lead to people working longer hence increasing the revenues that are coming into the social security system.

Economic growth

Raising the retirement age is an important concern in China due to the potentials of long terms financial sustainability. In China, working longer is the only singe most effective way through which the government can be able to handle the retirement security.  Ideally, most of the companies have pulled out from offering benefits plans. Thus, staying the workforce will allow people to save money for their retirement. On the other hand, this will save the government from much spending on pension (Staubli and Zweimüller, 2013). This is because the fact that people are working longer, there will be increased revenues as well as increased labor supply. Significantly, this will increase the productivity and capacity of the economy. This will enable improve the fiscal picture of the country in terms of higher income, improved tax revenues and increased labor market incentives that will enable the growth of the economy hence benefit the country.

Enable the government increase the worth of state pension

By increasing the retirement age, the government will be able to afford the increased value of the pension state. It is essential to understand that an increased value of the pension will enable Lowe poverty. The labor has an idea of how difficult it is for the older Australian to find work especially when their jobs have been taken on the basis of age-based discrimination in the place of work (Naumann, 2014). Often there is a degree of age discrimination that tends to be visible in the workplace with some of the employers being reluctant to employ individuals that are already in their 60’s. Thus people may find it difficult to gain employment in their old age. Increasing the retirement age will change the attitude of employing people at a higher age. As a matter of fact, the old age employees are considered to be more ski9lfull and understand the problem-solving alternatives more as compared to the younger workers.  Additionally, the increased retirement age will enable lower poverty levels without having to create disincentives to save. Ideally, many people will prefer a short decent pension over a small number of years rather than having a limited pension that is stretched over a long period of time.

Increasing life expectancy

Life expectancy for people has gradually increased thus most of the people are spending a third of their lives in retirement. This has drawn the state pension which has made the current system very expensive. On the other hand, there are quite a number of baby boomers entering the retirement with fewer people being born hence few workers to pay the state pension which is paid by the existing taxpayers. One of the ways that the government can solve the issue of the state pension is raising the age at which workers retire. Thus, the increasing the life expectancy means that it is sensible to increase the retirement age (Munnell, 2015). In the 20^th century, there has been a rapid increase in the life expectancy thus if the government continues to keep the retirement age the same, it will be expensive for them to continue supporting the lives of people in retirement.

Enlarged flexible labor markets

Ideally, there are various professions that have fixed their retirement age even if they prefer that the old workers to continue serving the organization.  Thus, increasing the state pension age will enable the employees to work longer. Increasing the pension age will facilitate an increased supply of labor more people will be available in the labor markets (Staubli and Zweimüller, 2013). As a matter of fact, jobs have increasingly become non-manual hence there is no physical barrier that will hinder the old people from working. This means that the economy will highly benefit from the individuals that are highly skilled and experienced workers.

 

Conclusion

Raising the retirement age will help assist much in the problem of fixing the economy and the state pension.  For instance, in the United States increased pension age is aimed at protecting and increasing the benefits of the Americans. Furthermore, Social Security retirement age would be more helpful at an older age as it will benefit the older workers due to the increased life expectancy. This will help to grow the economy as well as encouraging work and savings. The government will be able to tackle the issue of increased life expectancy, availability of skilled workers, increase the worth of the state pension, as well as society is security concerns in the country. Thus, it is sensible for the government to increase the retirement age.

References

Axelrad, H., & Mahoney, K. J. (2017). Increasing the Pensionable Age: What Changes Are OECD Countries Making? What Considerations Are Driving Policy?. Open Journal of Social Sciences, 5(07), 56. Available at: https://file.scirp.org/pdf/JSS_2017071114143686.pdf

Munnell, A. H. (2015). The average retirement age–an update. Notes, 1920, 1960-1980. Available at: http://crr.bc.edu/wp-content/uploads/2015/03/IB_15-4_508_rev.pdf

Naumann, E. (2014). 11. Raising the retirement age: retrenchment, feedback, and attitudes. How welfare states shape the democratic public: Policy feedback, participation, voting, and attitudes, 223. Available at: https://books.google.com/books?hl=en&lr=&id=JhKgAgAAQBAJ&oi=fnd&pg=PA223&dq=+increasing+the+retirement+age&ots=HOUSDOY1pb&sig=JMEFavWEpXZV2kbXInoQtu01Gpc

Staubli, S., & Zweimüller, J. (2013). Does raising the early retirement age increase employment of older workers?. Journal of public economics, 108, 17-32. Available at: https://www.sciencedirect.com/science/article/pii/S0047272713001734

Vogel, E., Ludwig, A., & Börsch-Supan, A. (2017). Aging and pension reform: extending the retirement age and human capital formation. Journal of Pension Economics & Finance, 16(1), 81-107. Available at: https://www.cambridge.org/core/journals/journal-of-pension-economics-and-finance/article/aging-and-pension-reform-extending-the-retirement-age-and-human-capital-formation/A6FCF2DF5F117FA0F6A650A716168AA7

Whitman, D. B. (2014). The opportunities of an older workforce. Organization for Economic Cooperation and Development. The OECD Observer, 22. Available at: http://search.proquest.com/openview/0fca50730e7b370659bdcc742fc738ae/1?pq-origsite=gscholar&cbl=35885