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Retirement Planning, European Style August 6, 2008

Posted by retirementwithaplan in retirement.
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How global is this economy? There is the power of the internet, which as the New York Times reported today has bridged the gap in communication and the ability to transfer wealth among trading partners and on the flip side, it also allows criminals to operate with greater efficiency as they steal information almost at will. While that is an entirely separate discussion, the question begs to be asked: does the quest for economic globalization end there?retirement planning

Once we begin drilling down into the sector of the economy that depends on their individual governments for support, the idea of a vast economic global community, meeting as one mind for the good of commerce and capitalism, quickly deteriorates. Europe, always known for its social safety nets continues to try and adjust its retirement comfort zone (it is difficult to use the phrase retirement planning since most European Union retirees rely on the system to support them in their golden years) by inching up its age limits for full pensions.

The Italians have set retirement for full pensioners at age at 59. The French have a 40 year rule, allowing a worker to take full pension benefits after completing the required work limits – which is expected to rise to 41 years if the French vote to approve what they already seem to accept as reasonable. The Germans use the same standards as the US and are looking to raise their minimum full pension retirement age from 65-years-old to 67-years-old.

The idea that poverty could be a reality for these retirees has prompted two separate but compelling ideas that if used in unison with universal health care could create a more economically stable continent in the years to come. But these ideas may have begun too late to be effectual.

Besides raising the retirement age, which would maintain the portion of each individual country’s cost of paying retirees from the Gross Domestic Product (the measure most often used for outlays compared to how much a nation produces), many countries are encouraging more savings among their younger workers. Sweden, if you will recall, instituted a mandatory 2.5% tax directed towards private accounts in the hope of offsetting some its own retirement issues.

This may be just a little late for many of Europe’s current workers facing retirement in the next ten years. This is especially true among voting age populations that may see a refusal to enact laws that might have a negative effect on their personal well-being. An increase in political activity among this group has already begun to surface.

So what would a group of Boomers, who have coalesced around the single notion of retirement protection look like? Could they actually form their own political party outside of the Democrats and Republicans? Can democracy embrace elements of socialism and still survive?

Should the Boomers unite as a party separate from the current two party system, I believe they would not have any difficulty accepting advanced retirement ages, forced savings while they are still working or even some sort of work/mentorship program that would allow workers to retain a place in their current workplace, suing skills they may have gained to help train the future workers.

As a party, they would resemble many of the members already in place in Congress who seem divided between what is good for the distant future while battling the immediacy of the near future.

But one thing is for certain, the party would be the primary movers in some sort of universal health care. They would see this as preventative, giving current workers the opportunity to enter (or approach) retirement in far better health than the current group of retirees. They would see to it that those who want to work have the health to do so without facing the crippling economic costs of maintaining not only their own health but that of their families.

Europeans for the most part do not have to worry about that issue. But can the health of Europeans be all that much better as they reach retirement? A recent report by the European Research Commission “found that, between 1995 and 2001, Belgium, Italy and Spain appeared to be the healthiest countries as both men and women’s disability-free life expectancy at birth was increasing faster than life expectancy.

“In Denmark, Great Britain and Portugal, disability-free life expectancy was increasing at the same rate as life expectancy. Other countries showed differences between men and women: in the Netherlands men’s disability-free life expectancy increased faster than life expectancy but women’s disability-free life expectancy declined over the period, so Dutch women were living longer but the extra years were spent in poor health.”

Lisa Girion, writing for the Los Angeles Times found “Costly diseases, many of them related to obesity and smoking, are more prevalent among aging Americans than their European peers and add as much as $100 billion to $150 billion a year in treatment costs to the U.S. healthcare tab” as reported by Health Affairs. The same journal “found that Americans were nearly twice as likely as Europeans to be obese (33.1% versus 17.1%), and they also were more likely to be current or former smokers (53% versus 43%).”

The best reform that the US could make, aside from the force a third party of retirees or soon-to-be-retirees could offer the political landscape would be an economic discussion about health care. Granted, the credit crisis, the energy costs, and the housing markets have all had a negative effect on the average American purse. Eliminate this crippling cost, and we can make better comparisons to our European counterparts and perhaps we could all have a more enjoyable global economy in the near future.



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