Who is to say there won't be a real increase in the productive capacity of the economy over the next 50 years?
Thanks Sarenco
Sorry for being unclear. What I meant to ask for was for a link to the McKinsey report itself?!
Other posters then said that in response to the pensions crises we need to save more. I am trying to point out that this is factually incorrect.
Future living standards will depend on future economic output, pension savings at an individual level may get you a bigger share of that future economic output but they will not increase it.
I started off thinking that it's a huge problem and something should be done. Now I still think it's a huge problem but from a selfish, personal point of view, I don't think it's in my interest for something to be done. As a high earner, I can pretty much guarantee that any solution will involve me paying in a lot more than I would ever get back. I am better off putting the cost of any solution into my own savings and looking after myself - in the full expectation that the contributory pension will be a lot lower/means-tested when I retire in 20/25 years time.
I started off thinking that it's a huge problem and something should be done. Now I still think it's a huge problem but from a selfish, personal point of view, I don't think it's in my interest for something to be done. As a high earner, I can pretty much guarantee that any solution will involve me paying in a lot more than I would ever get back. I am better off putting the cost of any solution into my own savings and looking after myself - in the full expectation that the contributory pension will be a lot lower/means-tested when I retire in 20/25 years time.
If good things come to pass and this is not an issue when I retire, happy days. But I don't think hope is a great strategy so I would rather trust myself than politicians to look after me in retirement.
So should we do nothing at all?
It seems to me that the most equitable way to address this impending crisis is to share the escalating cost between current and future retirees, in both the public and private sectors.
According to McKinsey, people in the bottom 40 per cent of household income do not suffer a fall in consumption power in retirement with the State pension replacing a large part of their pre-retirement spending. Is that sustainable?
It is worth bearing in mind that Ireland scores well on poverty in a relative sense, with a poverty rate in retirement of 6.9 per cent that is lower than both the poverty levels for the Irish population as a whole and for retirees in most other OECD states. As a society we are very generous to our retirees compared to most comparable countries but can we afford to continue to be this generous?
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