By Dan Berman
The average retirement
age will climb to at least 67 for both men and women by 2050, according to a report by an organization that represents 34 countries.
The Organisation of Economic Co-operation and Development, based in Paris, found that even the later retirement age might not be enough to compensate for changes being made to public and private pension plans. Those changes include lower benefits for those entering the workforce now.
Those lower benefits could lead to more poverty later, the OECD said. For now, it said, poverty among retirees was being held at bay in almost every country studied. But as benefit payments decrease for future retirees, the OECD said many would likely not seek safety-net payments because of shame or lack of information.
For 2010, the most recent year looked at, the poverty rate among those 65 and older was 12.8 percent, down from 15.1 percent in 2007.
The U.S. poverty rate for the elderly dropped from 22.2 percent in 2007 to 19.9 percent in 2010. Only Canada, Poland and Turkey saw an increase in those living in poverty. In 18 of the OECD countries, retirees were less likely to be poor than the general population.
The OECD also found that the percentage of retirement income that comes from public transfers, such as Social Security, would vary widely for future retirees. Lower wage earners would have 70 percent of their working income replaced through public transfers. The highest wage earners would get 48 percent from those sources, but would have savings to rely on. Those in the middle would face the biggest squeeze, receiving 54 percent of their income while having saved less for retirement.
“Raising retirement ages and promoting private pensions are all steps in the right direction but alone they are insufficient,” said OECD Secretary-General Angel Gurría in a statement. “Governments need to consider the long-term impact on social cohesion, inequality and poverty. Ensuring everyone has a decent standard of living after a life of work should be at the heart of policies.”
Originally published on BenefitsPro.com