The future of retirement in aging societies

Amongst the hallmarks of a civilized society are that both the rich and the poor experience increasing longevity, and that both groups are entitled to leisure at the end of their working lives. Yet, as the economic crises of 2008-2009 reduces the value of assets in pension funds an emerging political rhetoric suggests work for retirees is healthy and that pensions take resources from younger people. This study shows that spending for programs for the elderly does not displace spending for younger populations. Evidence from 58 nations reveals pension and education spending increase together, which suggests that when political forces are allied with the elderly and young families, social spending increases across groups. A 10% increase in spending on education (as a percent of GDP) is correlated with a 7.3% increase in spending on pensions. Evidence from the US - where older people have more choices than they had before about working at advanced ages - suggests that older workers are increasing their labor force participation because retirement income is eroding, rather than because older workers find work more attractive and easier to do. Advertisers may link youthfulness with doing paid work but, in the US, the elderly improve their health after retiring, controlling for other factors affecting health status.