Aging workforce and later retirement: how to cope?

http://www.channelnewsasia.com/stories/singaporelocalnews/view/295219/1/.html

http://newpaper.asia1.com.sg/news/story/0,4136,139676,00.html

http://www.channelnewsasia.com/stories/singaporelocalnews/view/295212/1/.html

In the recent National Day Rally speech, Prime Minister Lee Hsien Loong brought up a pressing issue: the rising life expectancy and its implications for elderly workers and retirees.

As Singapore grows more affluent, naturally living standards rise along with life expectancy. As such, more and more people are living past their retirement age. These people face a whole myraid of problems:

1. Financial shortfall

By far probably the most pressing problem facing retirees, many of today's middle aged workers will doubtlessly be worrying about their post-retirement age lives.

The idea is simple: As people live longer, they need more and more money to fund their expenses, which may even amount to more than their present ones. However, at present, most Singaporeans just aren't earning enough to save up for their retirement, let alone the prospect of illness.

To be able to save up enough to support oneself after one's retirement is a herculean task.

Assuming a person wishes to maintain his current living standards and expenses after retirement, which is also highly unlikely given rising healthcare costs, he will have to save up enough to last him for the 18 years from retirement to life expectancy, during the average 42 years of a person's working life.(21-62 years.)

This amounts to one needing to save about 43% of one's total income to support one's retirement, which is all but practically impossible, even without having a family to support.

2. Loss of children as financial supporters

It used to be that parents would raise their children, and then when they grew old, children would then take care of their parents in a role reversal. With the prospect of having to set aside about half of their own income just to settle their retirement though, and still having to content with supporting their own family, the elderly indeed no longer are able to count on their offspring being their financial support.

3. Longer working life

The retirement age has been raised to provide an avenue for workers to continue to have a steady flow of income into their elderly years, and also buys them some extra time to build up more savings, but how effective will this measure really be?

As stated in the news reports, less people are relishing the prospect of adding more years to their working life, wanting instead to withdraw their CPF earlier to pursue their plans while they still can, instead of waiting till old age prevents them from doing so.

However, if they do so instead of continuing to work, how are they to be able to support themselves financially after retirement?

Furthermore, even if they opt to continue to work, how many companies will be willing to retain these aging workers instead of hiring younger and more energetic workers, who are willing to settle for lower wages? Not to mention foreigners, who are competing with our locals for jobs. ( and not just the top end ones, foreign workers are taking over jobs from all levels from CEOs to cleaners and construction labourers )

Money issues aside, being a non economic contributor also brings with it certain stigmas.

In light of these problems, the good news of increased life expectancy does not sound like good news at all.