For Whom Does the System Work: An Idle Question?
By Staff News & Analysis - June 03, 2013

Retirement at 70 will be 'new norm' … Retiring at 70 will soon be the "new norm", as the number of Britons saving enough for old age reaches an all-time low. Less than half of Britons are saving enough for their twilight years, according to Scottish Widows. – UK Telegraph

Dominant Social Theme: Save more. Spend less. Simple.

Free-Market Analysis: Is it an idle question to ask for whom the system is working? Perhaps so, but perhaps not … not if the West's central-bank oriented system ceases to work for a large number of citizens. This, in fact, is not an idle observation.

In Europe, youth unemployment is improbably high in some countries, even according to government numbers that misstate the full amount of unemployment. Nonetheless, we are told Greece and Spain both have youth unemployment in the area of 50 percent.

And now comes this article in the UK Telegraph about the improbability of UK retirement before 70. Europe generally suffers from high unemployment, so much so that top Eurocrats have taken to warning about a "lost generation." They speak of youth, but they may well speak of retirees as well (as in a "lost" generation of retirees). Here's more from the article:

Only 45pc of adults are putting enough aside for their retirement, according to a stark report from Scottish Widows – the lowest figure since the pensions giant began tracking savings nine years ago. Households are prioritising living expenses, paying off debts and mortgage repayments over saving for retirement in the current uncertain economic climate, Scottish Widows found.

But despite pension saving being lower now than it was even at the height of the recession, Britons' aspirations about how much money they hope to retire on have risen – highlighting a worrying gap between expectation and reality. Retirement at 70 will be 'new norm' … The average annual income Britons would feel comfortable receiving at 70 is £25,200, up from £24,500 at the last survey in 2012.

However, based on current savings levels, an average person retiring at 65 is only like to receive about £3,860 a year in pension income. Even when topped up with the state pension, this would provide a yearly income of only about £11,400. Leading pensions specialist, Tom McPhail of Hargreaves Lansdown, said that in 10 years' time 70 will be the normal retirement age, as Britons are forced to work later to provide enough income for their twilight years.

"For a whole generation in their forties and fifties now, it is probably already too late," Mr McPhail said. "They are going to have to work to 70 or beyond before they can afford to retire …"

The issue ultimately is not one of retirement or even employment but whether or not citizens of Europe's hyper-regulated economies will retain faith in the system that they have participated in, trusted and created their lives around.

This is actually top-of-mind for Euro-leaders from what we can tell. See "Europe's Leaders Fear Revolution."

Germany fears revolution if Europe scraps welfare model … German Finance Minister Wolfgang Schaeuble warned on Tuesday that failure to win the battle against youth unemployment could tear Europe apart, and dropping the continent's welfare model in favor of tougher U.S. standards would spark a revolution. – Reuters

After Thoughts

When the system is failing entire generations, both old and young, can civil unrest be far behind? Is it, in fact, already here? Is regulatory democracy due for a significant overhaul and, more importantly, who will provide it and how? Are these idle questions? …

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