Those of us who have been around a few decades will no doubt
recall, certainly in western countries, how retirement was
viewed in days gone by. My earlier working years were in the
British Midlands and I remember the retirement parties and
presentations. They followed the same pattern. A little speech
from the manager thanking the employee for his loyal 40 years
or so of service followed by the inevitable presentation of
a gold watch so he could watch the time go by during his remaining
days of boredom. Often these days would be few as many soon
died having been ill-prepared for the transition from an active
working life. Birmingham buses at night were always full of
widows!
But attitudes are changing
In the course of the last generation attitudes have changed
considerably and are likely to change even more with the next
generation. Later life is now seen as a time of opportunity
rather than a time for rest and ‘winding down’.
More and more people now want their retirement to include
periods of work, education and leisure. Self-dependence is
also becoming more necessary as the old tradition whereby
families looked after their aged parents has gone.
Who wants to work after 65?
The fact is, many want to. For some, it is a necessity because
they simply cannot afford to retire. But wanting to work is
one thing; being able to is another. Many countries still
practice ageism where it is assumed that when you reach a
certain age you must retire. In the USA an official retirement
age no longer exists; people may continue working if they
are capable of doing so, although certain ages still trigger
retirement and social security payments. Nevertheless, in
practice many are persuaded to take early retirement, which
can be any time after age 50 in some industries. Many professions
still consider that retirement should take effect on reaching
a certain chronological age, ignoring the fact that the ability
to work varies considerably from individual to individual.
Another factor is health. A willingness to work can be quickly
destroyed by the onset of serious illness or disability.
When do expats in Bali retire?
Bali is almost totally unlike any other expatriate location.
Most long term expats in Bali are here out of choice. Few
are sent here by employers who have pre-determined retirement
clauses. Many are self-employed so they can decide for themselves
when they are going to retire. Some I have spoken to have
indicated they will never retire. But that of course assumes
continued good health up to one’s last days. However,
in reality, those who survive to a ripe old age are likely
to spend later years in failing health with no prospect of
being able to work. It is these years that must be provided
for.
Who will support you in retirement?
Living in Bali is no different from living in any other part
of the world. Retirement is costly and becomes more so every
year. Globally, there is a serious under-provision for retirement.
Governments can no longer support ageing populations. Companies
can no longer offer ‘defined’ benefits based on
final salaries. Several large American corporations, including
auto companies and airlines, have recently cancelled or drastically
cut their retirement and health benefits as the only recourse
to avoid bankruptcy. Americans are not saving; they are currently
spending more than $1.20 for every $1 they earn! In Bali there
are still many expatriates who have no pension plan whatsoever.
Many own land and property and count on it to provide income
in retirement but this can be risky. Some assume their businesses
will always provide for them but this too should not be assumed.
The events of the past few years have shown us how uncertain
a world we live in.
How much will you need in retirement?
As suggested in previous articles, to enjoy a comfortable
standard of living will require a monthly income of around
US$2,000 in the US, AUD2,000 in Australia or GBP2,000 in the
UK. Many will say they can live much more cheaply in Bali.
That is possibly true until the time comes when you are going
to need a serious level of medical or long term care. Beyond
65 medical insurance premiums can become extremely expensive.
The only alternative is to build up substantial reserves during
your productive years. I have seen many tragic cases where
long term elderly expats have exhausted their savings to a
point where nothing was left when a serious illness attacked.
Friends and family invariably chip in to help but at the end
of the day a forced repatriation to a home country which will
still provide some support is often the only answer. But returning
‘home’ under those conditions with no money is
not an attractive option.
So should we dread retirement?
I believe not, because the possibilities and options are so
varied. I have several friends who are now retired and they
spend their time between Indonesia, their home countries and
other parts of the world. With the retirement visa option
in Indonesia this is not hard to do. But these people had
all saved hard for retirement and planned well ahead. This
is the key, and with proper planning retirement can be a time
to do all those things you wanted to do but were too busy
making and perhaps spending money!
Colin Bloodworth is a senior adviser with Financial Partners
International. The opinions expressed are his own. If you
have any questions you may contact him at 021 520 8099 or
colin.bloodworth@financial-partners.biz
