In Japan and Europe, longevity statistics predict a startling
trend: over the next 20 years, more than 30 per cent of the
population in those countries will be retired. This has precipitated
a new urgency to fund retirement.
The majority of these seniors will depend very heavily on
the governments social programmes and experts believe
that in these developed countries, citizens will face plummeting
levels of public servicesand soaring taxes according
to the McKinsey Quarterly.
There are thinkers who believe that developed countries
more often than not, have become developed as a result of
global labour, exploitation and expatriation of natural resources.
So where does that leave seniors in a developing country
such as ours? It seems we may have to get busy following the
same example as the developed world, or reinvent something.
Since the former is still unlikely, that leaves us with reinvention.
If we fail at pro-activity, there may be an epic juggling
of needs of the young, against the needs of seniors.
From the level of the individual in our society, the choice
has to be action learning. We now have to learn on the run
about saving and reinvesting, and we need to develop some
new and innovative rules of the game.
There is value in the new action learning. The first basic
principle: you have to save a fixed percentage or quantum
from every bonus, lump sum payment, or unexpected receipts.
It may be the only legitimate way to meet and beat the looming
Conventional savings programmes are not meeting the needs,
and welfare programmes are going to force higher taxes on
us and squeeze public sector welfare, and public services,
sooner or later.
The end of year is usually bonus time in the life of employees.
Even small companies pay a Christmas bonuses. Many people,
who benefit from these lump sum pay-outs cannot even remember
what they did with it.
So heres the deal! Never consume, or spend all your
bonus, whether it is one months pay, or a percentage
of profits. Always put away some. Dont put it where
you can draw it out. Put it where you cannot touch it, without
In light of the demographic and ageing trends, put it away
in your retirement programme.
In the US, financial advisers are urging that all working
persons, should max out their credits and deductibles in annuity
palms, IRAs, and long-term savings plans. They urge
individuals to save small amounts every month.
But what creates a ballooning or a mushrooming of cash assets
is the discipline to put aside, for at least ten years, approximately
20 per cent of every lump sum payment, gratuity, etc that
comes your way.
Yes you can spend to enjoy something that youve always
wanted, but you can have almost as much fun on $20,000 vacation
as you would on a $40,000 trip! And what is more, you will
always feel less guilty about consuming $20,000 as opposed
In fact, local laws make it attractive to pass your bonus
tax-free directly into a retirement plan.
Typically, when you draw and spend your bonus, you loose
25 per cent of the money, just for making that decision. Because
then it is exposed to taxation.
So whats the deal? Can you move in with your childrens
family when you get older? And does the Centre for Strategic
and International Studies argument that 12 per cent
of GDP will be necessary to fund retirement benefits, mean
enough to you?