The elderly are rapidly becoming a bigger share of China’s population because of a policy begun in 1979 and only recently relaxed that limited couples to one child.
China is considering raising its retirement ages. But the government would likely meet resistance.
THE END OF TRADITIONAL PENSIONS
Corporations, too, are cutting pension costs by eliminating traditional defined-benefit plans. They don’t want to bear the cost of guaranteeing employees’ pensions. They’ve moved instead to so-called defined-contribution plans, such as 401(k)s, in the United States. These plans shift responsibility for saving to employees.
But people have proved terrible at taking advantage of these plans. They don’t always enroll. They don’t contribute enough. They dip into the accounts when they need money.
They also make bad investment choices — buying stocks when times are good and share prices are high and bailing when prices are low.
Several countries are trying to coax workers to save more.
Australia passed a law in 1993 that makes retirement savings mandatory. Employers must contribute the equivalent of 9.25 percent of workers’ wages to 401(k)-style retirement accounts.
In 2006, the United States encouraged companies to require employees to opt out of a 401(k) instead of choosing to opt in. That means workers start saving for retirement automatically if they make no decision.
EASING THE PAIN
Rebounding stock prices and a slow rise in housing prices are helping households recover their net worth. In the United States, retirement accounts hit a record $12.5 trillion the first three months of 2013.
But Boston College’s Center for Retirement Research says the recovery in housing and stock prices still leaves about 50 percent of American households at risk of being unable to maintain their standard of living in retirement.
When they look into the future, retirement experts see more changes in government pensions and longer careers than many workers had expected: