When it comes to your future retirement prospects, what feelings come to mind? Positive feelings about expected financial independence, or pessimistic worrying about financial hardship?
Your answer just might depend on where you are, geographically. From a global perspective, many of us in the West tend to have a different view from those in major countries in the East. A short article on the Smart Money site summarizes the differences between prevailing Western and Eastern views on retirement. The article references a survey that was done about retirement and financial planning, and was fielded in 17 countries.
The key findings are that in North America and Europe, people tend to be a more pessimistic about retirement – with many people believing that their own retirement will not be as good as that of their parents. Conversely, in Asia’s newly strong economies, people are more optimistic about having a retirement that will be better than their parents (69% in India and 62% in China, for example).
The phrase that really jumped at me about the Western view was that for people between 30 to 60, it’s generally viewed that parents are experiencing “a golden age of retirement which will not be repeated “.
My interpretation is that Westerners see standard of living declining, and Easterners see standard of living increasing – which manifests itself in different views of retirement prospects.
Personally, I like to be positive about things in general. We might not be able to choose our circumstances in an instant, but we can choose our attitude. Easier said that done sometimes, but optimism and hope – coupled with hard work – can bring great things! All this said, I have to admit that what I anecdotally hear is mostly concern as opposed to optimism here in the U.S.. In terms of the economy, jobs, saving for retirement, college expenses, etc – it’s mostly concern as instead of a confident, upbeat outlook. Frankly, in this case I feel much of the concern is justified.
I’m bursting with nationalistic pride, and want my country to get back to being the true economic superpower that it once was. Some might disagree, but I still think that long-term this is possible. Even today, our country is a place that many people are eager to come to and make money. Capitalism is a great system.
Thing is, for all of our accomplishments, we just don’t have a culture of saving money. We’ve been spenders, as evidenced by the staggering national debt. Why should we have ever gone into debt as a nation, much less have trouble paying the interest on that debt? This shows up in our personal savings rates. The article quotes China as having a 38% rate, India 35% (of GDP). The U.S.? We’re at 4%. An prior post of mine highlighted how so few people could cover a sudden, unexpected $2,000 expense – another indication of lack of savings.
Having said all this, I know that we’re still quite lucky to be here, and still do have a very good quality of life overall. But things sure don’t seem as easy for people as they might have been a generation ago. Hopefully, out of these economic conditions of recent years, the awareness of our culture of debt will be raised to the point where we as a nation expect responsible decisions made. I know I’m doing what I can to save and live within our means, and I’ll bet you are too.
My Questions for You:
What are your thoughts about your retirement prospects -are your thoughts more optimistic these days, or affected by fear of potential hardship?
Do you feel that our retirement prospects (for those of us of working age) don’t match up to the quality of retirement of a generation ago? Or, do you share the positive view that’s more commonly held in developing Eastern nations.
It would also be interesting to discuss ideas for what we can do to improve our collective situation.
I feel pretty good about being able to slow down gracefully, but with the realization that it will all have to be self-funded. I’m not convinced that social security or Medicare will be able to deliver on promises made 10 or 15 years in the future. Maybe that’s part of the pessimism being felt in Western countries. Asians have no illusions or maybe haven’t been conditioned to think that it’s the government’s responsibility to take care of them in their old age.
101C – It sure is hard to be convinced about promises being delivered down the line, isn’t it? I know what you mean about self-funding. I suspect that while many of us agree about self-funding, many behaviors are based on the idea of being ‘taken care of’ by the system in the future.
I got a late start on my retirement planning, but I’m not pessimistic about the future. I might have to work a little longer, but that’s not necessarily a bad thing. As for the east/west difference the eastern countries are emerging and the west is coming into a different phase of consumerism/capitalism. I’m sure we’ll adjust, but we need to make some philosophical changes as well; like start saving more than 4%!
Little House – yes, I know what you mean about our collective need to have some philosophical changes about saving!
China’s changing… their one child-policy is changing the way that older folks view retirement. Children now have two sets of parents to provide for instead of just the son’s parents. Additionally they’re experimenting with putting in a social security program. Government savings such as Social Security replaces individual savings, so savings rates will go down. We have all effectively purchased an annuity in the form of Social Security, so the direct comparison isn’t fair. Developing countries would like to be able to do that too!
Also, most folks in India can’t cover $2000 either.
Nicole – that’s an interesting point on China. One is the aspect of the one child policy making the daughters now responsible for helping parents. The other is the notion of being absolutely responsible for parents – not the same approach as here in the U.S. and Canada. And yes, I totally agree that most folks in India can’t cover $2,000 – not even close, actually I’ll bet. There’s growing wealth there obviously, but still tons of abject poverty that is on a scale vastly different than here in the U.S. and Canada.
My retirement prospects are way better than my parent’s. They did not have much of a nest egg built up at all, whereas we started saving with our very first paycheck out of college.
I am not saying we will be rich by any means, but I am more worried about health than money at this point. That may be naive on my part. However, I can control how much money we save, and I can’t control all aspects of my health.
Everyday Tips – great point on health. We can control more in terms of money than we can health in the big picture. We may never run out of money, but unfortunately we do run out of time. Not that we should dwell on this too much:)
I’m generally optimistic about the future! Sure the current economy isn’t what most people expected, but then this isn’t the first time. After the great depression the economy picked up, took a while, but then it did pick up and we saw some excellent rallies.
Stay positive.
MoneyCone – great example with the great depression. We do have U.S. history on our side, right?
I think it’s possible to have a strong retirement in the west, but we have to be willing to work for it. Unfortunately, I think that this country has gotten too fat and lazy, and many people expect things to be handed to them by the government or the “rich”!
While our standard of living will most likely spiral downward, we can be strategic and develop a more “frugal” attitude, and learn contentment.
Khaleef – yes, I agree that there’s been some entitlement that’s impacted us. I’m trying to cleanse myself of such entitlement!
I am not concerned about having sufficient savings, however I am concerned about occupying my time. I in the midst of developing things to do when I do retire in 6 years. My days will be filled with volunteering, an occasional class, blogging, cycling and more. I am practicing this summer many of them to get myself ready.
krantcents – that sounds like a great place to be, worrying about things to do vs food on the table. Well done.
I got that survey report but didn’t get a chance to read it yet. One more thing I would like to add it (at least for India), we really have modest dreams. Before I came to the US, my “retirement” would be like – get a 1 bedroom house with a small garden in a suburb, play/take care of the grandkids, volunteer in our little village and just relax. No travel, no McMansions… That would not have cost much. These days as India and China are flush with money, I don’t know what I would have thought if I stayed back. But if I didn’t change drastically in a few short years, I would have happily answered that I am very optimistic that I will retire well. So how retirement is defined is important in these type of surveys too.
I think one of the reasons for this is the way we view old people in the West versus the East. Here they are laughed at, and seen as an afterthought. In the East, old people are revered, respected, and the head of the family. Also, people support their aging families and/or live together in extended households much more in the East, so that would probably improve their outlook on life. Who wouldn’t want to be so close to their grandchildren, or have the extra help of their youngsters instead of possibly facing being pushed into a nursing home?
Just some thoughts.
I think my generation is bringing down the western view of retirement prospects. Our parents had pensions while most of us don’t. We didn’t grow up thinking retirement would be self-funded and didn’t have the mindset we’d have to do so.
The rules changed along the way and it’s been a hard adjustment. Not complaining; just saying.
Kay Lynn,
Good point, and I have to say I agree and that makes sense. Watching parents have one retirement vehicle breeds expectations in kids that their retirment will follow the same path as that of their parents. There’s been an adjustment period, where people took a while to acclimate to the reality that the old way of doing things was history. Actually, I think it extends to some Gen-Xers too.