Sooner or later governments in New Zealand, like their counterparts overseas, will need to address the question of how we fund public superannuation (pension) programmes when the baby boomers retire in large numbers and there is a smaller percentage of working age adults to cover the costs.
Renowned management consultant Peter Drucker famously wrote that there are many things that cannot be predicted but demographic trends are knowable and hence can be planned for. One of the biggest demographic trends of our day is the upcoming retirement of large numbers of baby boomers. It is something we already know will happen and is often discussed from an economic perspective, but the true impact on our political system is rarely considered and poorly understood.
The key factor that will make the baby boomer retirement such a problem is not the sheer number of people heading into their golden years. The real concern is that so many people are financially unprepared for retirement and this extends beyond the boomers to the succeeding generations as well. While a good many of the older boomers actually still have reasonable expectations of retirement benefits, those who come later do not. Why? Because…
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