Blog: Rethinking retirement


Rethinking retirement

The workforce in many countries is aging, and employers as well and individual governments need to be ready. So why not start rethinking now?
Rethinking retirement

I am not someone who regularly peruses annual shareholder letters outside of that of my own organisation; but when my favourite podcasters mentioned Larry Fink’s 2024 Annual Chairman’s Letter, I had to go read it. Given how much valuable advice is tucked away in this single letter, I couldn’t help but wonder how many life lessons I was missing by completely ignoring these documents. While the letter is extremely long and full of fascinating facts like the fact that “Young Americans today are 50% more likely to question whether life has a purpose (compared to 20 years ago) — 4-in-10 say it’s ‘hard to have hope for the world’”, what I will focus on today is what the majority of the letter focuses on – retirement

 As Fink says in his letter, we focus a tremendous amount of energy on helping people live longer lives. But not even a fraction of that effort is spent helping people afford those extra years. The more I read about retirement, country age demographics and life expectancy, the more aware I’ve become of my own investment strategy. While Fink’s letter is a testimony to brilliant marketing (of Blackrock’s retirement offerings and capitalism), it is also great because it poignantly addresses something we should all be worried about. And something organisations as responsible entities can do something about. Here are three things I would like you to consider today.  

Rethink retirement age

The paradox is not lost on me. Like mentioned above, we all want to live longer but retire earlier. In most nations today, the retirement age hovers around 65 and yet if studies are to be believed, most millennials will live to see their 100th birthday. This essentially means that we need to have invested or saved enough to last us at least 40 years.

I definitely don’t think anyone should have to work longer than they want to; yet as Fink says, it is crazy to know that our anchor for the right retirement age — 65 years old — originates from the time of the Ottoman Empire. He also cites the example of Netherlands, where in order to keep their state pension affordable, the Dutch decided more than 10 years ago to gradually raise the retirement age. It will now automatically adjust as the country’s life expectancy changes. This is without doubt an unsavory option yet one that will have to become the norm if we were to keep economies sustainable. 

So, what can organisations do? A fair bit. Firstly, fight ageism. While new entrants into the workforce may feel discriminated against for being ‘too young to be taken seriously’, things are far worse at the other side of the spectrum. Can you imagine the reaction when someone in their fifties decides to engage in a career switch and want to apply for the role of an entry level software engineer? I speak from experience – they get singled out and outcasted. It takes true inclusion to not let our biases play a role not only at hiring but the entire lifecycle of the employee. 

Secondly, engage in early conversation with those nearing retirement age to understand how you can support them in case they want to extend their time with the organisation. Most people would say yes to a few extra years if the opportunity exists and is a good one. Lastly, if you are in a position to do so, engage in the conversation on what the right retirement age for the country is. Should it be earlier or later? Or should the individual have a little more say?

Rethink pensions 

All through my career in India, I never paid attention to the EPF or any other retirement planning schemes. When I switched organisations, I withdrew the entire amount and celebrated the extra take home cash. Turns out I am not the only one.

However, here in Ireland, both my organisation and the government have made sure that I can’t get away from pension related education. Every March, the organisation runs a month-long campaign with educational sessions tackling an array of topics related to saving for retirement. Through the year, financial experts are invited and almost every single one of them advices maximising the pension scheme.

As a result, while I may still not be making the most of the benefit, I am definitely aware of my actions and implications. Do the same, if you don’t already. Your employees will thank you. And even better, don’t skimp out on employer contribution and make pension enrollments the default. Many governments now mandate organisations to auto enroll employees into a pension scheme with the option to opt-out as needed. If your country doesn’t mandate it, don’t wait for it to. 

Rethink work 

Of all the rethinking we need to do, the most urgent and important is rethinking how work is designed today. The fact that everyone wants to retire earlier is the clearest indicator that work isn’t what it should be. Organisations today knowingly or unknowingly (which I doubt), do everything possible to squeeze as much as they can from each employee while they can. Every single indicator – tenure, stress levels, sleep and health indicate that work these days does more harm than good for longevity. It shouldn’t come as a surprise that everyone is looking for a way out.

But what if work wasn’t something you retired from, by choice?

What if it was a means for someone to earn an income till they were ready to dip into their retirement fund?  What if people enjoyed work without burning out by the age of 40? Is it really in everyone’s best interest to squeeze every individual as much as they can till they can give no more? As Larry Fink writes in the letter, the most compelling question for our generation probably is - How do we encourage more people who wish to work longer with carrots rather than sticks? Somewhere deep inside, we know we need to rethink work. Now is the time to do it; no matter how impossible or challenging the task may look. 

It is surprising how real retirement is and yet how few are prepared for it when it turns up at our door. Organisations shoulder a lot of responsibility for a variety of world issues and retirement is one on the list. With increased pressure on government retirement support and ageing demographics, organisations will need to step up to help keep economies running for the next 100 years. How are you going to ensure you help create a better story? And more importantly, how prepared are you for retirement?

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Topics: Diversity, Benefits & Rewards, #Future of Work

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