Young people may already be resigned to working longer than their parents, and retiring on a smaller income than previous generations.
But a new study of the world’s richest economies shows many people entering the workforce now are at risk of retiring in poverty, with only a handful of countries able to sustain pension benefits at anything like current levels.
“Future generations are likely to find their pension entitlements much less generous than today’s and many may face a serious risk of pensioner poverty,” the Organisation for Economic Co-operation and Development said.
Several rich countries are planning to push the retirement age towards 70. Workers in the U.K., Ireland, and the Czech Republic can expect to keep working until the age of 68 by 2054.
They’ll no doubt be envious of millennials in Luxemburg and Slovenia, who should still be able to retire as early as 60. The average across the developed world is expected to be 65 for men and women.
When people finally retire, they need be prepared to take a considerable pay cut.
British pensioners already see the biggest drop in income when they leave work — making just 38% of their former salaries — and the situation will get worse. Workers retiring in 40 years in the U.K. will receive a pension worth just 30% of their pay.
American retirees do better, taking home 45% of their pre-retirement salaries on average, the OECD said. That will fall to just 35% by 2054.
But millennials in Spain, Luxembourg and Turkey will feel much less of a shock on retirement. They should receive 82%, 77% and 75% of previous earnings respectively.
Retirement ages are rising because people are living longer and the population in developed countries is aging. That means there are more pensioners to support, and fewer young people to pay for their pensions.
In addition, job security is declining across the world, which means people often have to work longer to accumulate enough savings to retire.
“Many of today’s retirees, at least men, worked for most of their lives often in rather stable jobs. But a job for life or even an intermittent career might not be the norm for people starting out today,” the OECD said.
The average employment rate among people aged 55 to 64 across the developed world rose by 7% in the last decade.