Outrage in Belgium, Federal Government Raises Retirement Age to 67

Outrage in Belgium, Federal Government Raises Retirement Age to 67

Oh man, after just 137 days the Belgian citizenry will know its next government and all the great new policies that come with such an occasion. Of course, since politicians are worse at keeping secrets and better at leaking juicy gossip than all sorority girls on the American continent put together, most of the legislative reform is already out in the open. As it turns out people aren’t to happy with it!

With budgetary deficits stomping all over our excellent social security and health care, the political class has taken to austerity measures to reign in our growing national debt. When you’re pushing the limits of increasing government income by already taxing everyone and their dog, it makes sense to decrease government output and spending. But wait, there’s always that one sneaky policy that finds a way to defer government spending while increasing current income.

Enter the official retirement age.

I’m not going to bore you guys to death by going into detail on how the Belgian retirement and pension system works, but keep in mind that you basically receive a percentage of the monthly average of all your paychecks combined. The longer you’ve been in the work force, the higher the percentage. As such, your retirement income is guaranteed by the state. We don’t have 401(k)’s, 529’s, 403(b)’s, 34DDs that’s something else, Roth IRA’s, or any other type of tax-advantaged accounts.

Now the new overlords of Belgium have decreed that we have to work until 67 instead of 65 to receive a full pension. Basically, you have to work two more years to receive the same benefits than people who are eligible for retirement now.


Now, I’m not starting an ideological and political debate on how to deal with retirement from a societal perspective. That’s what the democratic process is for. Something I do want to highlight however are the results from a study on retirement that got released on the very same day the policy decision of our new government got leaked. Most newspapers headlined the study with “Belgians hope to retire at 60.4 years-old”.

Guess what? Almost 70% of the people interviewed fear that their pension will not suffice, with over 60% being quite sure that government will reduce their official pension. Fair enough, that actually makes sense when you look at our demographics.

Now you’d think we’d take matters in our own hands, but no: 60% of people still in the work force rely only on their official government pension with no extra retirement savings on the side. That’s insane! Yes, we do have a lot of savings stashed away, but why does the majority of the Belgian populace not want to take care of their own financial security during retirement?

Previous posts I’ve published here strangely enough reflect the very same sentiment. Most folks much rather have the government take care of their retirement, even though the odds are stacked against that very same government in terms of budgetary pressure and demographics. It’s pretty obvious that our federal government won’t be able to provide future generations what our parents and our grandparents are now enjoying.

Instead of putting all of their energy in epic rants and raging discussions, why do my waffle-eating brethren not go for financial freedom? No, not the kind where you get to own a llama. True financial independence, maybe even early retirement.

I too was a non-believer once, but the past few months have shown me that it truly is attainable. So many great bloggers show us every day that living frugally, saving, and investing are a sure-fire holy trinity to building wealth and financial security. My own experience has taught me the same.

It’s not just Belgians that don’t want to build their own retirement fund. When I read US-based blogs or comments from US visitors, their comments are filled by anecdotal evidence of people not saving enough. My popular post on savings rates in the Stuff Our Parents Never Taught Us series shows this too. On average, most people, irrespective of nationality, tend to save between 5 and 10% only, which is often not enough to retire on comfortably before 70 years-old.

Why is that? Even if the government finds a way to provide you with a full pension package once you turn 67, why not make life so much easier by taking away any uncertainty regarding your financial safety?

I for one am not waiting for someone else to find a solution to my retirement problem. As much as I love the services our government provides, having my own back-up plan in place provides me with so much peace of mind that it’s priceless. I have definitely embraced the holy trinity – frugal living, saving, investing – and I hope you have too!

Now to get everyone else on board…


  1. Here in Canada the age was raised to 67 as well. I think it’s silly to rely on government support during your retirement. I’d rather rely on myself. It’s interesting that Belgium does not have any retirement accounts. More reasons to start early like you!

    1. Tawcan,

      You can’t really blame people that they want to rely on government support during retirement when that’s the way it’s always been in Belgium. I do however have an issue with not taking action yourself when you see the current system is slowly reaching its limits and making itself impossible.

      We have one option to save for retirement ourself that gives a 30% tax break on the money you add to it. Too bad the contribution limit is only €950 per year and there are only a couple of designated mutual funds (and associated high costs) we can choose from. Luckily we have no capital gains tax though!

      Best wishes,

  2. Tawcan beat me to it telling you that Canada also raised the age but it’s being phased in. It will not affect my husband at all and will only impact me by a couple of months. Actually we currently have 2 elements of Government funding when retired Canada Pension Plan (which you and your employer pay into) and Old Age Security. It is the Old Age Security which is being moved to 67. If you have too much income in your retirement the OAS gets clawed back, so it’s really only for mid to lower income people. Most cannot live well enough on both of these pensions so Canadians are strongly encouraged to also put money in RRSP’s (Registered Retirement Savings Plans) and TFSA (Tax Free Savings Accounts).

    So do you get money deducted off your paycheque in the form of income tax and pension contribution that you get back later in life when you are retired? So what you are saying Is there no tax incentive in Belgium for you to contribute to your own investment accounts. Anything you invest is totally on your own, correct? Do you pay income tax on the income (investment gains) annually or only when you cash in the investments?

    1. Thanks for chiming in Debs, I like reading about pension and retirement systems in other countries!

      Do the savings in your own RRSP, TFSA or Canada Pension Plan also impact your OAS when you retire? Because that would mean a serious moral hazard: if you save on your own, you basically ‘risk’ receiving less money from the government. That’s an incentive to spend it all now, basically or shelter your wealth.

      I should have addressed the Belgian pension contribution a bit more closely maybe, because you touch on a good point. The way it works here: we pay general taxes, which are then distributed between our million governments – seriously, we have seven governments – and the federal government then uses its bag of money to pay for the current pension schemes of retired people. Basically, working people are not saving for themselves, but paying people who are already retired.

      To me, that’s a serious flaw of our pension system: if our demographic declines, there’s less people that can support a larger group of retirees. The same thing happens during an economic recession, which is what we’re experiencing now. Less people with a job means a drop in government income, even though retirement spending remains the same.

      Like I explained to Tawcan, there’s only one retirement account in Belgium, but it’s limited to €950 yearly and you can only select a few mutual funds with high expense ratio’s. You’ll receive a 30% tax break of your after-tax money you invest in those funds. When you turn 60 there’s a 10% tax on the entire sum you’ve amassed. This pot of money is yours and only yours.

      Investments using after-tax money obviously are yours too. Dividends are taxed at 25%, but there’s no capital gains tax. A lot of folks in Belgium want to see a tax shift to capital gains, but that’s not going to happen anytime soon with our new centre-right government.

      1. Great discussion here, Waffles. Yes, if you have too much income from your own retirement investments plus your CPP you are considered too wealthy and you don’t get OAS. Don’t quote me but I’m thinking that number is somewhere around $70K right now but I could be wrong. Meh, I guess these are first world problems. I hope to have enough income but not too much so that I still get my OAS. However, it can vary from year to year. For example, my Dad, who is 89, made too much last year on his investment portfolio and due to capital gains in selling my aunt’s condo so he lost his OAS for 2013. You can’t lose your Canada Pension Plan though.

        We have the same risks here with our CPP, too few working paying in for baby boomers retiring. You have a very small tax incented retirement amount at $950 yearly. Ours is around 18% of our income annually. However, I’m thinking you must have a lot higher deductions for your Pension than we do for our CPP. I wonder what your government invests that deducted money in to ensure it keeps pace with inflation.

        1. Your system makes sense, actually! Apart from the fact that you could lose your OAS depending on the income you have each year.

          I wish I could have a tax-free account where I could stash away 18% of my income annually. Can you do with the money in that account as you please? We’re basically stuck with a few mutual fund providers.

          Our taxes are pretty high, yes. Most of that goals to social security, another big chunk to pension payments. I don’t think our government invests any money: they use current taxes to pay current pensions. They’re not investing your money to return to you later.

  3. You said it, NMW. We’ve got social security here rather than a national pension system, but they’re mostly the same-ish, albeit SS is not really designed to be enough to live on (it’s a supplement).

    My biggest gripe is this–a pension system (or social security) can work at ANY age, if it’s been constructed by actuaries who know what they’re doing and not politicians. I’ll give you two guesses whether political favors or actuarial science determines US pension benefits/contribution levels.

    In the states, we often hear about the decline of pensions, rise of 401ks, etc. The truth is, they could all work–we could pension everybody and it would be fine if only the contributions to the pension system accurately reflect the value and funding levels the benefit requires.

    That said, I still think my own money is better managed in my own hands.

    1. Charles,

      You’re right that a pension system should work at any age, given that people contribute enough to it!

      The problem in Belgium is that when pensions were first set up, they decided that people currently working have to provide for the retirees. Like I explained to Debs, when your demographic experiences a downward trend or people grow exceedingly older, the group of retired people becomes too large to be supported by an ever smaller group of people in the work force.

      Good luck changing that now without leaving one generation or the other feeling left out…

      I’m with you on managing your own money! Sadly not everyone is in the same situation. That’s why I think it’s a good idea that the government provides others with tools to enjoy a comfortable retirement, but it has to offer enough flexibility, which is not the case right now.

      Thanks for your input, very interesting,

    1. Glad you enjoyed my posts, SCM! We’re a weird country sometimes, but it seems to work. Even without a government for over 500 days like in 2010 and 2011 we turn out alright. 🙂

      Thanks for stopping by,

  4. NMW,

    I’m not sure how your system works over there – do you contribute to this pension, or is it completely funded by the government? Or perhaps it’s funded by taxpayers from the general tax fund?

    I’m quite sure we’ll also see our retirement age raised over here in the US at some point as well. Perhaps the benefits will be reduced also to compensate for longer lifespans. I don’t know how that will look 20 years from now. Actuaries and our government (what a party!) will have to figure it out with debates going back and forth for years, I’m sure.

    I can see how people get a little upset with changes in taxpayer-funded pension systems like Social Security. It’s not like it’s “free income”. My money is taken from me and promised to be paid back later. So I can see where people get a little funky when the rules change midstream. I’d obviously prefer not to pay the 6.2% (12.4% now that I’m self-employed) to the government and invest it myself instead. Unfortunately, our society is too irresponsible on the whole to do this, so responsible savers like myself are suckered in by force.

    Best regards!

    1. Jason,

      Our system is funded from the general tax fund that everyone contributes to. The federal government then allocates a (large) portion of that money to current pension payments. To me that’s the biggest problem of our system: government income can drastically change (fluctuating demographics, recessions, etc.), but the spending on pensions remains the same.

      You’re right that most benefits will have to be adjusted because of longer lifespans. It makes sense that people have to work longer now than, say, fourty years ago because they are expected to live at least ten years longer. I also think the quality of retirement has drastically changed for the better over the past fifty years.

      Pensions or social security are definitely not free income. I calculated the current policy change will cost me at least €75,000 (current prices): I’ll be paying more income taxes for two years and I’ll receive my pension benefits later (if I were to work until 67). Sadly it’s not true that the government guarantees us to pay back “our money” later: current taxes are used for current retirees. Politicians won’t make themselves loved by mentioning that part of our legal framework, but there’s hardly anything to be done about it without one generation or the other feeling left out.

      You hit the nail on the head with your last sentence: not everyone is responsible or savvy enough to take care of his or her own retirement. That’s why I think it’s a good thing that a government tries to ensure a comfortable retirement for everyone. Too bad there’s not much flexibility for people who want something different.

      Thanks for your insightful input,

  5. NMW,

    taking matters in our own hands is crucial. We are both in our twenties, so the laws will probably change more than ten times until we might get a pension paid to us. I personally don’t believe in ever getting significant money from it after inflation.

    By saving and investing we become less and less dependend on those promisses. However, I am not sure if that is a way aplicable for the general public. Some might choose their regular waffles instead.

    1. Stef,

      You’re right that legislation will probably change more than we care to until we reach our official retirement age. Even though our pension payments are automatically adjusted for inflation, I’m also not counting an receiving anything. When I look around me I seem to be the only one though.

      Saving as much as possible now and enjoying the power of compounding hopefully will make a comfortable retirement possible for us! Too bad that’s not for everyone, like you said.

      Thanks for stopping by,

  6. According to official projections in the UK, people in their late 20s now are likely to have to work until their 70th birthdays! Most of these youngsters don’t read such news/articles about pensions, so they’re in for a shock. My official retirement age is currently 67 but there’s still every chance that this could change again.

    1. Weenie,

      I think most of my peers know they’ll have to work longer, but they either just don’t care or they can’t be bothered to do anything about it. That’s also the feeling I got from the study above. It completely blows my mind though, the inactivity of people, even though they know it’s necessary if they want to keep their current standard of living.

      Let’s hope the UK also doesn’t change its policy too often!

      Thank you for dropping by again,

  7. Shouldn’t the government put themselves on trial for one of the greatest pyramid schemes ever? I would much rather manage my own money (and get a better return) than let the government touch it.

    1. Haha, pyramid scheme, that’s actually what it is when you look at it purely objectively: most governments promise to pay you more than you put in now. 🙂

      I don’t mind social security and pensions schemes, though, as long as the reasoning behind them is sound enough. The current system in Belgium does not have my approval though.

  8. NMW,

    For most Belgians this is bad news but for some it is irrelevant. I know that I will be financially indepent at the age 40 – 45. I did try to explain this once at my work and they think I’m crazy.


    1. Geblin,

      Dangerous territory you’ve been through by mentioning your FI plans at work! I just smile sheepishly when they start talking about retirement. Only my immediate family knows of my plans.

      I hope you’ll reach FI at 40/45. The recent discussions of a new capital gains tax or even higher transaction taxes on stock orders luckily didn’t materialize, because that would seriously have hampered your progress.

      Best wishes,

      1. Well I didn’t say anything about my own plans. I just tried to explain that it is possible to gather a passive income stream with dividends stocks or rental properties, but they didn’t grasp it.

        I’m happy they didn’t introduce one of the capital gains. The transaction taxes wil change from 0.25% to 0.28%. It could be a lot worse…


  9. I agree with you – it’s sad to see how many people rely on the government in retirement. My parents are, and I know I wouldn’t feel safe in their position. I’m so glad I stumbled upon the personal finance community for that reason, otherwise I probably would have gone along without a retirement account! Scary thought. I love the humor peppered in throughout the post. =)

    1. Erin,

      Hopefully everything will turn out alright for your parents! I suspect they’re not too far away from retirement?

      The personal finance community really opened my eyes too. I knew before I had to do something, but the how and what were still a big question mark. You guys helped fill in the answer.

      Thanks for the kind words. I appreciate it!

  10. Looks like the Canadians came out of the woodworks to tell ya we already shifted to 67 over here!

    This isn’t your mommy and daddy’s world anymore: no more job security, no more government benefit security. There is a big cultural shift occurring in the West and being able to see it and react accordingly is more important than ever.

    Crushing your debt and building your wealth is a simple place to start.

    1. Begone! Stay in your woodworks! 😉 (What the hell does woodworks even mean!?)

      You’re right that job and government benefit security are rapidly changing. The golden years after the War and deficit spending afterwards are behind us. All we’re left is a big pile of debt and currently struggling economies.

      Although that sounds like a lot of doom and gloom, I actually think they provide a nice starting point to sort out the problems of our current systems and find a better way to organize our society in the future. I think it’s essential for our society as a whole to rethink some of the ways we go about things. Why do we have 40-hour work weeks, for example? It’s not like there’s a golden rule somewhere that says it’s absolutely necessary for everyone to work 40 hours every week.

      Until that happens, I’m sticking to saving and investing!

      1. Haha imagine trolls and how they supposedly come out of their caves – kinda the same concept 😛

        I mean, if you wanna get a little on the conspiracy side, some people claim the 40 hour work week is held up and perpetrated because gov and corps know that if people are stuck doing work for most of their time, they will pay a premium for things and services that they don’t need to, spurring on spending and the economy.

        Now….. perhaps there’s SOME truth to it??

        I sure as hell know I don’t need 8 hours in a day OR need to be chained to my desk to get what I need to get done at “work” 😛

  11. As it has already been mentioned, it is such a shame that so many people are in the position where any major changes with government retirement plans causes so much pain and disruption to their lives. A few minor changes in peoples habits earlier in life could render these changes meaningless. It is much easier to make financial changes when you are 35 than at 65. Hopefully people in the future will become better educated that Social security was designed to be a small component of retirement income not a sole source.


    1. MDP,

      It’s sad indeed to see that most people are not enjoying the financial security they should have built for themselves over the years. Changing your standard of living when you’re younger is indeed much easier and most likely to stick with you your entire life.

      The crazy part about our pension system is that it originally was designed as the sole component of retirement. I guess it didn’t play out the way they intended.


  12. I actually think that people should work as long as they are healthy and vibrant. I also think that people don’t save enough money for retirement in general. Belgium is a much smaller country population wise than the U.S. and it’s having difficulties paying for social services/retirements. Can you imagine what we’re dealing with? Most people my age or younger (GenX or GenY) are resigned to the fact that we won’t have Social Security. So, it’s up to us to manage our retirements and save a heck of a lot more than we have been. I don’t believe there is enough urgency in getting this message out to people.

    1. Michelle,

      Do you mean they should be allowed or should actually work as long as they are healthy? There’s a big difference. I believe no one should be forced to work if they don’t want to, but that also means they won’t enjoy the same benefits as someone who worked his entire life and contributed a lot more to our social security.

      Apart from the size difference I think the fact that Americans in general tend to overspend also adds to the retirement problems over there. Luckily Belgians are mostly good savers and hardly anyone uses credit cards over here.

      Do you find that people your age understand the issue and the sense of urgency in getting started building their wealth?


      1. Good question, my answer is yes to both of your questions. Americans are living longer and for the most part healthier (and fat) lives. It doesn’t make sense to use a retirement age that was set 50 years ago. Things change. I currently work with a 74 year old and he ROCKS!! He gives a lot to all of the organizations that he is involved in and is a vital part of the organization. And you’re correct-Americans are terrible savers. We need to address that but I’m not sure how.

    1. William,

      I remember the Dutch changing their retirement age to 67 a couple of years ago already. Wasn’t that in the middle of the Euro crisis? The retirement schemes in the Netherlands are completely different from ours though, but you still have your own problems.

      I hope you’re already saving and investing as much as you can, because we’ll need it!


  13. Well, I have always planned in case I do not end up even getting SSI. That way, if it is still paying when I can claim the benefits, it will be a windfall. If it is not, I hope to be prepared to do without the income.

    However, for the vast majority of individuals, having to wait until later in life to receive benefits will be a major decision on whether they can or should retire early. Good luck.

    Keep cranking,

    Robert the DividendDreamer

    1. Robert,

      That’s actually a great way of looking at it: if you receive them it’s a bonus, if not then no harm done. I think I’m going to steal that idea! 🙂


      1. I have been working for a lot of older people who really do not have much. I have seen how they rely on SSI for their sole income source. It is sad sometimes because it is so hot around here and a few do not use the A/C because they cannot afford it. Some of the people may be just very frugal or even downright cheap, but for the vast majority, it would be mighty rough to live inside a closed house without A/C just because they do not want to spend the money- it is because they do not have it. As a matter of fact, I stay outside when I talk to them because it is hotter inside during the summer. That is why I figured I would plan on not getting it so I would be able to provide for myself and my family without absolutely needing SSI. Give it your best.

        Keep cranking,

        Robert the DividendDreamer

  14. NMW actually im quite glad I have that stinky bill.. im more aware of financing because of it.
    Happy to know it now about dividend investing and being frugal while im 26 then when im in my forty’s haha.

    Time for me to log all my progress in a blog for the world to read.
    Soon to be available 🙂

    1. William,

      I’m glad the reformed pensions in the Netherlands opened your eyes! At least something good came out of them.

      Looking forward to your blog!

  15. NMW, C’est ridicule ça. Bon bref, tu es sur le chemin d’être indépendant dans quelques années donc je pense que cela change grande chose. Mais sérieux c’est atroce. J’espère que la même chose n’arrivera pas en Angleterre.

    Prends soi de toi et je te suis. Merci

    1. Steve,

      Merci de visiter! Malheureusement mon français n’est pas très bon, donc je vais continuer en anglais. 😉

      You’re right that most people consider it atrocious, but I hope they also understand that it’s absolutely necessary to change something about our pension system if it is to survive over the next fifty years. I’m not saying the way our new government is making changes is the right way, but something has to be done.

      I’m not sure how retirement works in the UK, but I hope you won’t have to hear the same kind of news any time soon! Now that you’re on your own road to financial independence it shouldn’t matter too much anyway, but it’s always nice knowing what the back-up option is like in case your own plans fail.

      Thank you for stopping by and hope to see you back soon,

      1. Hi there NMW,

        I thought you were belgian, and you were fluent in French that’s why I’ve kicked off in French so that’s my bad.

        I agree with you a back up plan is always good you never know what may happen.

        In the UK there is default retirement age which 65 but you can work as long as you want. That’s mad right. However, some employers can set a compulsory retirement age if they can clearly justify it. It’s an employee’s responsibility to discuss when and how to retire with their employer.

        But retirement age is not the same as State Pension age which can be between 61 and 68, depending when someone was born and if they’re male or female. Anyone can carry on working past State Pension age.

        I hope that’s clear for everyone here. It’s good to know how it works in other countries.

        We surely talk soon


        1. No problem, Steve!

          My French used to be way better, but I hardly use it anymore these days. Pretty awesome for someone from the UK to be so good at French though!

          Seems like you have a logical retirement system. I also like the fact that they take into account when you were born and if you’re male or female.

          Funny thing: it used to be that civil servants weren’t allowed to work past their official retirement age. They had to retire even if they wanted to stay.


  16. That must really suck. Having to work your whole life, just about to retire, but nope, you have to work two more years to get your pension. I’d be crushed. Thank God for dividend growth investing, right?

    1. I think I’d be crushed to, but thankfully it seems like they’re setting up a system so that someone who is 64 suddenly won’t have to work three more years instead of one more year.

      Hallelujah for DGI indeed! Can’t imagine having to work to 65, let alone 67.


  17. The gov’t might as well of said “retire if you can, if you dare.” This is probably going to happen in the US in the near future. But luckily, we all are here to help out a fellow investor in hopes of early retirement.
    Thanks for sharing this with us

    1. DD,

      You’re actually hitting the nail on the head. While everyone complains about it, there’s no law that states you have to work until 67. You can retire any time you wan’t, you just won’t get the same pension benefits as someone who worked until 67.

      I hope for most US citizens that won’t happen anytime soon though! Most people aren’t ready to take care of retirement by themselves.

      Thank you for visiting,

  18. Hi,

    In Finland we also just changed the retirement age. But to make it more fun it has a sliding scale right now that is tied to your life expectancy. So younger you are now, the longer you are expected to live and longer you need to stay in the work force.

    My retirement age was changed from 63 to minimum of 67. And to get full pension I need work till I’m 70 years and 6 months old. My son who is now 1 year old needs to work a lot older then me.

    Does that sound a better system then what you got?

    1. Finforwin,

      The system you describe actually makes a little bit more sense! The way it’s set up right now in Belgium it doesn’t matter how long you’ve been working. Someone who started at 18 has the same legal retirement age as someone who studied until 25 and only then started working, irrespective of birth year too.

      What really bothers me though is the fact that there are so many exceptions to the general rule. And if you start awarding one group some advantages you’ll start a snowball. In the end someone will have a different retirement age with special provisions.

      Also, I just tried to check out your blog, but I’m afraid my Finnish is not up to snuff! 🙂

      Thanks for stopping by,

  19. Hi,

    I don’t really know to feel about it. The Finnish system takes in account if have been doing some really physically demanding work that you could retire earlier. It was unclear what is that kind work, or who decides it, or how it will actually work. I gained pension from time that I was studying, so that it doesn’t leave me behind to those you started working at 18 year olds.

    But working still when you are 70+ because you have to is not the way it should go. I personally would not like to work till there at my current job.

    I’m just starting my blog in English, till then you just have to learn finnish, it’s easy, even I can do it.

    1. FFW,

      I understand how you feel as I have some of the same questions and reservations. Ultimately, though, I don’t really care all that much since I’m trying to retire way earlier than any official retirement date anywhere in the world.

      Ha, now I see your .com address. I’ll definitely check out your blog!


  20. I think most of you are delighted to be willing slaves, just so long as you set a bit aside. You take the fact that despite modern technologies one needs to work longer and save more? What is is the matter with you? How about we track down where all the money goes? What are we going to do with another 100 years of “progress”, retire at 95. WTF!

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