Our population should work another 10 years before retirement
It’s healthier and financially better if we move the retirement age to 75
As John Tsang dots the “i”s and crosses the “t”s on his budget draft, here is one big idea, inspired by the charismatic 96-year-old sprinter Charles Eugster, that would inspire his doubtless-turgid Budget address: push the formal retirement age to 75, and encourage all elderly people that are interested to work to stay on working as long as they like.
Of course, John Tsang will adopt no such initiative. But he should – and it would make a great difference to the horrible arithmetic that haunts the Government’s current consultation on the Mandatory Provident Fund and retirement protection.
If you don’t know of Charles Eugster, you should – just watch his TED talk on Youtube, or Google him and watch him run 200 metres in 55 seconds, to set a world record for the fastest 200 metres by any over-90 year old. He is a World Masters Rowing gold medallist, an international decathlete, a Swiss national fitness champion, a celebrity bodybuilder, and an all-round athletic superhero. And he only took up exercise aged 85, three years after his wife died. He is an inspiration to all of us tumbling helplessly into our “silver” years, and has ideas that would not only make lots of us much healthier in our old age, but would recalibrate our retirement protection plans, and also save our government a fortune in elderly-related medical costs.
For Eugster, a dentist until 75, the greatest social evil of all is forced retirement – “a massive health calamity and future financial disaster,” he says: “Work is therapeutic, good for health and intrinsic to self worth and self-esteem.” He argues that in spite of the belief that retirement gives greater opportunity to do sport and other exercise, the reality is that the loss of work-related exercise – including the exercise used in getting to and from work – far outweighs any gains from post-retirement exercise. And he has a lot of good science to support his case. My health monitor on my wrist tells me my working day involves on average about 10,500 steps – which would be difficult (and boring) to match in a gym.
“In retirement, inactivity is an important cause of death. People are overnourished, overmedicated, and physically and mentally inactive,” he says: “The retirement age was never intended to be lower than life expectancy.” I know that to be true for sure: when Bismarck introduced the world’s first retirement scheme in Germany in 1889, the scheme was based on a retirement age of 65, while life expectancy was barely above 60.
As baby boomers in many advanced economies, including Hong Kong, approach the official retirement age, a demographic crisis will soon engulf pension and health care schemes around the world. Low birth rates mean that there will be fewer and fewer working people carrying the cost of supporting people in retirement. While we in Hong Kong (where we have about 15 per cent of our population over the age of 65) are far better off demographically than a country like Japan, where today 26 per cent of the population is over 65, and a shocking 38 per cent will be over 65 by 2055, we are worse off in terms of retirement security because our official pension scheme – the MPF – is underfunded, and was only introduced in 2000. People retiring today have just 16 years of contributions – far too little to provide financial security through a retirement that might stretch for 30 years. And even in 2040 when people will be retiring with a longer lifetime of contributions, the amount saved will last most families for little more than 5 years.
Taking Charles Eugster’s advice, John Tsang could resolve this crisis at a stroke. Workers and their employers would make 10 extra years of contributions, and we would not begin to draw down on our savings for a further 10 years. By then, the virtues of compound interest would ensure that a far larger proportion of our retiring population would retire with enough saved to last them comfortably through their remaining “silver” years.
Because medical evidence in advanced economies shows that people in work stay healthier than people not working (one fascinating Harvard study shows an alarming jump in strokes and heart attacks in the first year after stopping work), by advancing the retirement age to 75 we would at the same time have a healthier elderly population. That should help to prevent health care costs from exploding as our population ages.
Our medical profession ought to be the champion for such change, but Eugster is withering about the role they play: “The medical profession has allowed the old to degenerate. They know nothing about ageing.” This implies much more attention given to maintaining wellness through our lives, rather than treating us after sickness has appeared. The failure of the medical profession to shift priorities has led us into “an age of degeneration and disease”, he says.
You don’t have to be a super-athlete like Eugster to vindicate the case for more spending on wellness. There is today ample evidence that greater focus on wellness will result quickly in fewer in the community suffering from obesity, diabetes, high blood pressure, heart attacks and strokes. Nor is it too late to start. After all, Eugster only began taking his wellness seriously, after his wife died, and he “discovered and endured the horrors and degradation of retirement, including the disintegration of my body.”
So my message to John Tsang when he stands up on Thursday to unveil his 2016 budget would echo that of Charles Eugster: don’t waste time tinkering with the tea money. Instead, adopt just this one big idea and let its positive effects flow through the economy: lift the official retirement age to 75; let those who want to work to stay active in work as long as they like; educate on the virtues of maintaining wellness; and devote more of the health budget to wellness provision. It is easy and obvious, don’t you think John?