New Zealand baby boomers are not retiring - Implications for social policy planning

Implications for social policy planning

New Zealand baby boomers are not retiring. They are fizzing with renewed vigour, working hard to fund their lifestyle choices, keeping themselves fit and planning for an active later life, rather than an infirm, sedentary one. They universally do not want the retirement their parents had and they see no reason why they should accept it. Nor do they intend to.

They are planning to start or run businesses, keep working where they are, keep up with technology and use it to work smarter; and they are in large numbers going to move to get more out of life and make the world a better place to live, for all New Zealanders. Public policy needs to be flexible and open-minded in order to foster this vital ingenuity and harness the resulting productivity benefit (which can be used to fund the social safety net baby boomers see as their right and responsibility). Maintaining rule-driven bureaucracies will only foster rule-avoidance.

Unlike their American counterparts, who worry about health but are not actively planning a solution, New Zealand baby boomers are taking control of their health prospects and are less likely to become the health burden projected by traditional economic models and that are currently being tracked in the Health, Work and Retirement Study (Allpass, 2008). New Zealand baby boomers see maintaining their health and fitness as an essential driver enabling them to fulfill all of their plans for a vibrant and affluent future. There is an opportunity to develop health policy that empowers and incentivises them to keep themselves fit so they can stay productive and pursue their dreams.

The voluntary sector is significant and likely to rise in significance over the next 40 years. Baby boomers are prepared to do their part in this sector with both time and money, but a large influx of support may overwhelm the sector at the beginning and it may require some structural assistance to assimilate baby boomer contributors.

There is no point in making public policy rules about how members of this generation should behave once they turn 65, or of continuing to fiddle with economic indicators within the constraints of the traditional economic model. This is akin to placing a ladder against the wrong wall –energy can be expended on scaling the wall, but achieve nothing because the real change is going on elsewhere.

The inflexibility of the elderly dependency ratio to cope with new definitions of work for those over 65 makes it defunct. Changing the age of entitlement to 67 or another number is likewise not going to make a difference.

New Zealand baby boomers are notorious for shrugging off rules – because they view rules as simply not applying to them – and finding an ingenious way around to get what they want. Economists and social planners can calculate projected retirement rates, social burden ratios and rest home bed requirements as much as they like, but it would be a mistake to start building rest homes just yet, because New Zealand baby boomers have no intention of filling them.

They will tell policy planners what they want, if they are asked, provided the contextual framework for seeking their feedback is based on them and not the generation before them. After all, all baby boomers see themselves as special, and New Zealand baby boomers see themselves as more special than most.

Not only do New Zealand baby boomers have no intention of becoming a drain on the workforce, but they will continue to add their prodigious productivity to the nation’s coffers. Not only will they not leave a hole in the workforce, they will focus on enhancing their skills to fills the gaps created by changes of work style. Baby boomers are a highly productive generation, well educated, experienced and ingenious; harnessing and channelling their productivity and thirst for intellectual, emotional and physical adventure presents a far greater challenge for social policy planners than counting the pension pennies they may not need.

The challenge for public policy development is how best to structure a framework that will allow New Zealand baby boomers to be self-sufficient and self-responsible, while remembering that, as with all attitudinal research that talks about majorities, there will still be people who want a traditional retirement lifestyle, even if not as many as feared.

What is "retirement"?

Defining retirement

In the 1880s Germany’s Chancellor, Otto van Bismarck, created Europe’s first pension plan to provide state support and entitlements for old people considered too feeble to work. The age of entitlement was set at 65, at a time when average life expectancy was 45 (Dychtwald, 2005b). Prior to that, people worked until they died, and their roles in society changed to suit their skills, experience and fitness.

During the twentieth century, retirement came to be seen by some as a tool to remove older workers from the workforce into their “golden years” to make way for younger workers, particularly as the baby boom bulge moved through the workforce and put upward pressure on the job market. By the end of the twentieth century, retirement had come to be seen as a triumph of twentieth century prosperity and a “right”. It was a social benefit promised to reward workers for “decades of demanding and often unfulfilling labour” (Smith & Clurman, 2007).

At the same time, average life expectancy increased to the mid-70s (and higher for women). If the age of pension entitlement today were adjusted to take account of the increase in average life expectancy, it would be 70 instead of the current 65.

Today, retirement age varies across countries. In Australia, the traditional age at which retirement starts has been 55 (Quine & Carter, 2006). In Canada it is 60 (Statistics Canada, 2006). A third of American workers retire at 55, with the proportion rising to half by the age of 60 (Dendinger, 2005). In New Zealand, the Retirement Commissioner advises that there is no official retirement age, but the age at which Government superannuation begins to be paid (previously 60, currently 65 and subject to change) is generally taken to be the age of retirement.

Retirement can be defined as a “one time event that permanently divides work life from leisure” (Dychtwald, 2004); a “complete withdrawal from the workforce” (Dendinger, 2005); “complete and worry-free disengagement from the workaday world” (Smith & Clurman, 2007); to “step aside and let others take the reins” (Smith & Clurman, 2007); “to remove from view, withdraw from society” (Bogan & Davies, 2007). The word retirement carries connotations of deceleration and withdrawal from the world, a gradual wind down to death, or “waiting for God”. In the UK, Huber & Skidmore (2003) report that retirement is about “not working”, but say that, “to view it as the twilight of a career beyond which meaningful self-fulfillment becomes impossible is inadequate”.

While the New Zealand Retirement Commission does not have a set definition and considers there to be many options for older people, when called upon it will define retirement as “the situation where an employee permanently withdraws from the regular paid workforce” (Retirement Commission, 2008).

Smith and Clurman (2007) list the key elements of the traditional concept of retirement as “not working”; “pensioned” (living more frugally on savings or fixed pension); “maturity” (age, limitations and legacy); “surrender – stepping aside to let the next generation set the societal agenda”; and “closure”.

American gerontologist Dr Ken Dychtwald has described the concept of retirement as outdated, saying it “should be put out to pasture” in favour of new approaches to suit the changing work ambitions of both workers and employers (Dychtwald, 2004).

The “golden years” ideal of retirement required that older people be willing to step back and let the next generation take charge, and that the next generation be able to generate enough income to pay the cost of their elders’ retirement.