The French government announced they will raise the age for retirement by two years to 62. This move, which will take full effect by 2018, is part of a larger government initiative to combat an out-of-control pension system and reduce the country’s budget deficit.
“Under the plan, which is likely to meet trade union resistance, the minimum retirement age will be lifted gradually to 62 in 2018 from 60, and levies on capital gains, stock options and other investment income will all shift higher,” Reuters reports. And France is not the only European country to take this step in recent years.
Germany recently announced that it will gradually increase the retirement age from 65 to 67. Spain and Greece, two countries that have been ravaged by national debt crises, have each debated raising the retirement age by two years and Greece has actually considered banning early retirements outright.
All of this raises the question of whether the global economic downturn will lead other countries, including the U.S., to follow suit. On the one hand, the U.S. does not provide nearly as many perks to retirees as France does. The Christian Science Monitor reports that retirees actually make more money on average than working people in France. Yet, the U.S. is also struggling to bring order to an unstable economy. France had a national deficit of 7.5% last year whereas ours was 10%.
To make matters more complicated, some economists have warned for years that the U.S. may face a retirement crisis beginning in 2011 or 2012, when many baby boomers turn 65. As more Americans begin to retire over the next decade, it will put a strain on our Social Security system.
In the U.S., there has been some debate in recent months over whether it would be wise to raise the retirement age, which currently stands at 67 for all workers born in 1960 or later, and 65 for those born before that. One Florida politician wants to raise the retirement age to 70 and one Republican candidate for the Utah state senate would like to see the retirement age go up even more to 77.
Asking citizens to stay in the workforce longer may be a good way to reduce the amount of money a country will need to spend caring for them in their twilight years, especially as life expectancies increase, thereby extending those twilight years. But is it a smart idea for a government to sacrifice the quality of life of its people in order to balance the budget?
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