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…