EUROPE HAS TRAIN WRECKS, TOO | Mauldin Economics

EUROPE HAS TRAIN WRECKS, TOO | Mauldin Economics



...A 2015 OECD study said developed-country workers could on average expect governmental programs to replace 63% of their working-age income. Not so bad. But in the UK, that figure is only 38%, the lowest of all OECD countries. ...



...To this point, UK retirees have had a kind of safety valve: the ability to retire in EU countries with lower living costs. That option may disappear after Brexit....



...Spain has 1.1 million more pensioners than just 10 years ago, and as the Baby Boom generation retires, it will have even more. Unemployment as high as 25% among younger workers doesn’t help, either. has 1.1 million more pensioners than just 10 years ago, and as the Baby Boom generation retires, it will have even more. Unemployment as high as 25% among younger workers doesn’t help, either.



...he US is in “better” shape, mainly because we control our own currency and can debase it as necessary to keep the government afloat. US Social Security checks will always clear even if they don’t buy as much. Spain doesn’t have that advantage if it stays tied to the euro currency. That’s one reason the eurozone could eventually spin apart.



...some governments pay retirees more than they made while actually working. This OECD chart shows pension benefits as a percentage of working wages. It is more than 100% in Croatia, Turkey, and the Netherlands, and above 90% in Italy and Portugal.



...in both the US and Europe. We think a growing number of people can spend 35–40 years working and saving, then stop working and go on for another 20-30-40 years at the same comfort level, all while fewer workers pay into the system each year. I’m sorry, but that is magical thinking at its worst.



...when Franklin Roosevelt created Social Security for people over 65, life expectancy was roughly around 56. US retirement age would now be around 82 if the retirement age had kept up with life expectancy.