The ageing population: might we need a Plan B?

I suppose it’s human nature to concentrate on trying to stave off catastrophe, but the more it starts to appear un-stave-offable the more you really do have to come up with a plan about how to deal with it when it happens.

I’ve written about this same idea before in the context of global warming, observing that we’re still spending huge amounts of time and effort trying to find ways of stopping it, or at least slowing it down significantly, when it’s perfectly obvious that nothing on earth is going to stop two or three billion Brazilians, Russians, Indians and Chinese from buying cars and either airconditioners or central heating or both as soon as they can afford them, and on this basis alone any pratting about subsidising middle-class families in the UK putting solar panels on their roofs will be about as important as a fart in a hurricane, and the real trick is to figure out what we’re going to do with everyone when sea levels and air temperatures do rise however much the worst-case scenarios say they will.

But exactly the same point applies to the ageing population, or more specifically to the ageing-and-pitifully-short-of-retirement-savings population.  In just the same way, we’re still spending 99% of our available energies and resources on looking for ways to make the problem disappear (currently mainly by means of pensions auto-enrolment).  And I’m sure that if you do the maths, the problem isn’t going to disappear, or at least not until it’s spent a good many years getting a great deal worse.  But my point is that I don’t think anyone is doing the maths, or if so I haven’t seen any sign of them.

Given almost-entirely-uninfluenceable demographics, and the size of most people’s current pension pots, and current rates of retirement savings, it must be possible to work out how many people aged over, say, 65 there are going to be over the next 40 years or so and just how little they’re going to have to live on.  With final salary pensions now drying up, outside the public sector at least, like rainshowers in the Sahara, and with the average DC pot now said to be worth about £30,000 at retirement, the figures must be horrendous. So horrendous, in fact, that it’s not just an issue about a lot of people who’ll be living in poverty and depending almost totally on the State.  It looks like it must be more that that:  it must be a complete reversal of the market-defining idea that while young people have all the borrowings, old people have all the savings.  Somebody in a presentation I saw recently said this trend represents the “end of the Saga Holidays generation:”  that strikes me as the very least of it.

But I don’t see anyone painting this overall picture,. and starting to map out the consequences not just for the State and the health service, but also for a huge range of commercial organisations.  Old people running out of money will be a disaster for businesses ranging from, for example, mainstream commercial theatre (have you seen the average age of the audiences these days?) to manufacturers of old people’s cars like Honda and Toyota – and, of course, for the very large chunks of the financial services industry that takes money off these people in return for doing things to their rapidly-disappearing savings and investments.

As I say, for many millions, the die is already cast.  Anyone aged over 45 depending, for example, on minimum levels of pension contribution under auto-enrolment is going to be retiring on a pittance.  Who has got their heads round all this?  Who is painting a picture of what’s going to happen to the next two or three retirement generations, and what the consequences will be for those who in one way or another depend on them and their money?  No-one, as far as I can see, that’s who.  In just the same way that as the planet warms up, I don’t see any sign of anyone making a plan to move those living within a thousand miles of the overheating Equator to the agreeably temperate and fertile new landscapes of Antarctica.

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