Retirement aspirations for many people were waylaid as a result of the 2008 crisis. That situation is not improving. In fact, the head of American International Group (AIG) says that he sees retirement age going as high as 70 or 80 years old as a result. This, he says, would reduce health and insurance costs and would relieve some of the burden now faced by younger workers to support the largest population segment ever as they age and begin to draw retirement benefits.
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AIG CEO Robert Benmosche cites the European crisis as a big example of why retirement age will have to rise. Governments across the globe will not be able to sustain the costs the aging baby boom generation will incur in healthcare and retirement income support. The Greek government will have to recognize that they have no easy way out of their predicament. The average life expectancy in Greece is 81.3 years. Average age of retirement in Greece is 59.6. Benmosche says it is imperative for Greece to stay in the euro because AIG is one of the largest property and casualty insurers there.
The short-term nature of some of AIG’s contracts would help to mitigate the fallout in the case of a Greek exit but it would also increase AIG’s obligations. The firm has already had to sell non-US based assets to pay for its own rescue during the 2008 financial crisis. The US government’s ownership in AIG has decreased from 92% to 61% and analysts say that, at this time, AIG has the wherewithal to facilitate a pullout by the Treasury from its ownership. As long as tax policies and financial regulation hang in the balance, businesses will lack the confidence to invest and to help economies grow.
So the insurance aspect of the European crisis is yet one more ingredient to watch as events continue to unfold. The retirement age issue remains regardless of how the European crisis resolves itself.