Roger Martin, Dean of the Rotman School of Management at the University of Toronto recently wrote a guest editorial for the Globe and Mail in which he gave readers a history lesson. Did you know that it was Otto Von Bismarck who set the retirement age at 65 while establishing a social security system in Germany in the late 19th century? There was a catch though – in the late 19th century life expectancy was below 50 and hardly anyone made it to 65.
Martin says no pension system is designed to allow 40 years of work to fund 20 years of retirement and says that “The idea of a 65-year retirement age in 2010, let alone in the future, is plainly silly – silliness.”
He suggests the following fix: set 75 as the target retirement date and increase each person’s retirement age by an amount inversely proportional to their current age. Don’t panic if you are nearing retirement age, this proposal wouldn’t really affect you. It would affect your grandchildren though:
“For children between 0 and 4 as of Jan. 1, 2011, their retirement age would be 75. For each year of age greater as of Jan. 1, 2011, the retirement age would be two months earlier. For an 18-year-old, it would be 72 years 8 months. For a 40-year-old, 69 years. For a 54-year-old, 66 years 8 months, giving me 11 years to prepare to work for an extra 20 months. (I think I can manage that.) [Editor’s note: his salary is a good six figures!] For a 60-year-old, it would require another eight months of work, and for a 64-year-old, nothing extra.”