Why do we retire? Mike Mansfield, Program Director at Aegon Center for Longevity and Retirement, reflects on the issue in five questions.
This is part of a series of four whitepapers about retirement that Aegon Center for Longevity and Retirement (ACLR) is publishing in collaboration with the Leyden Academy on Vitality and Ageing.
Q1: What has changed since the introduction of pensions into our system?
Mike Mansfield: "In a world where one-in-five people can expect to live beyond their 90th birthday, retirement has become a phase of life that is longer than childhood. Since pension systems were introduced, advances in medical science have meant that people are living longer in good health; as a result, the concept of retirement is changing. Many people aspire to stay socially connected, involved in their community and continue to work in some capacity. By asking ourselves the question 'why do people retire?' we have an opportunity to re-examine what retirement is and redefine it for future generations."
Q2: Why are policymakers still largely focused on the economic aspects of pensions?
MM: "Policymakers are right to focus on the economic aspects of providing pension benefits, but should not lose sight of the bigger question: how can we create a sustainable system to fund a longer life? We need to look, not only at the cost of pensions, but also the cost of providing healthcare and other services to people as they get older and should look for opportunities to reduce and redistribute these costs. Programs that help people stay active and maintain good health will reduce the burden on our healthcare systems. Finding ways for people to continue working in jobs that are fulfilling and appropriate will mean that people can draw down on their pension in a more gradual way."
Q3: In which aspects is retirement more than a financial challenge?
MM: "It's a common theme that we've seen every year in the Aegon Retirement Readiness Survey; globally, more than half of the workers interviewed envision some form of work in retirement. Yet, the sobering reality is that close to two-in-five retirees retired sooner than they planned and the most commonly cited reason for this was their own ill-health. This shows that preparing for retirement is more than just a financial challenge; it requires us also to focus on maintaining good health so that we can do the things we want to do as we get older, whether that is continuing working or pursuing our hobbies."
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Q4: What should be done to renew the vision on retirement?
MM: "For the past seven years, Aegon has been conducting research on people's attitudes and readiness for retirement. The Aegon Retirement Readiness Survey covers 15 countries in Europe, the Americas, Asia and Australia, interviewing 16,000 people. In our most recent report, The New Social Contract: a blueprint for retirement in the 21st century, we identified nine essential design features. Two of these are particularly important in renewing our vision on retirement. A positive view of aging is paramount for the new social contract. It should celebrate the value of older individuals and take full advantage of the gift of longer lives. We also need to create a more age-friendly world in which people can 'age in place' in their own homes, and live in vibrant communities designed for people of all ages that promote vitality, health, productivity, and economic growth."
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Q5: Can you share your personal views on this?
MM: "I value the feeling of independence I get from working and want to make a contribution as long as I can. I realize that this will change over time but I want to be in control of how this happens. I hope that I can be the one to decide when and how I phase into retirement at a time that is right for me. I think many people are of a similar mindset and hope that we can find a way to introduce more flexibility into our retirement systems so that people have greater possibilities to save for the future and feel confident about retiring in a comfortable lifestyle. Making this hope a reality will require a greater commitment by the existing social partners to work together, and also the inclusion of new partners for people to feel empowered to make decisions and informed about the choices they have."
For more information and background, Whitepaper 1: Why do we retire? is available here.
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