Should we trade a higher retirement age for shorter workweeks?

Government budgets are being strained by longer retirements and a low worker-to-retiree ratio. It's inevitable that retirement age will increase. But how do we make the change more palatable?

In last week’s Globe & Mail Gen Squeeze’s Paul Kershaw wrote about about the strain caused to government budgets by rising life expectancy and a declining ratio of working-age adults to retirees.

Canada's retirement age of 65 is currently five years lower than where it stood when Ottawa launched Old Age Security (OAS) in 1952, even though average life expectancy has increased 14 years over the same period. Moreover, there are now 3.3 working-age adults to pay for the OAS of every retiree, compared with 6.9 when boomers started working.

Paul proposed the following trade-off: slightly longer work lives for shorter workweeks.

Here are the key takeaways from the article:

• Longer retirements and fewer workers to support retirees are important reasons why government budgets are under strain.

• If budgets are going to be balanced, it seems inevitable that retirement age will have to be increased.

• But accepting a higher retirement age won’t be easy for young Canadians, who are already been faced with numerous unfair setbacks—from unaffordable housing to environmental decline.

• The way to make a higher retirement age more palatable to young Canadians is to offer a shorter workweek alongside it: a retirement age of 67 for a 35 hour workweek.

As Paul points out, the typical Canadian employee works 300 hours more each year than the typical German or Danish worker for about the same average income. A shorter workweek would help redress this disparity.

What do you think? Does Paul’s suggestion seem like a worthwhile trade-off? Let us know in the comment below.