There were two steps that the Chinese government took at once to fix the country’s unstable retirement system: raising the retirement age and increasing the number of years that workers must work before they can get a monthly salary.
According to AP, China’s state broadcaster said that the country’s legislature made this change on Friday. This came after “a sudden announcement earlier in the week that it was reviewing the measure.”
This is only sour, not sweet and sour. And we can learn something from it as we try to figure out how to fix our own unstable retirement system. I mean that Social Security payouts could be cut by up to 21% in a few years if we don’t do something.
Learn about what China did. Men’s retirement age will rise from 60 to 63 over the next 15 years. If a woman works full-time, her retirement age will rise from 50 to 55, and then to 55 or 58.
China has the same trouble as we do, as well as Japan, Western Europe, and China. As the number of seniors grows and takes their retirement benefits, there aren’t enough younger workers to support them in these and other places.
China has a problem with this that is partly caused by its famous “one-child policy,” which said that families could only have one child starting in 1979. In 2020, China had about five jobs for every retiree. But that number is expected to drop sharply by 2050, to 1.6 workers for every pensioner. It’s one reason why China got rid of the “one-child policy” in 2015.
Our government can’t force us to have kids like the Communist government in China can. But do you know what can? Stresses on the economy. The U.S. birthrate has been going down for years as young people deal with the rising costs of rent, health care, child care, and other things. This kind of stuff, along with the fact that student loans are often very expensive, keeps people of marriageable age from getting married and having families in the first place.
In both the US and China, having fewer kids means fewer people growing up, going to work, and paying into the system. As late as 2020, I said that China had about five workers for every pensioner. The ratio in the US in 2022 was much lower, with about 2.8 workers for every retiree, according to the Peter G. Peterson Foundation, a neutral think tank that studies how America’s economy and finances are connected.
It’s pretty easy to make changes like the ones China has made to its retirement system when you live in a top-down communist country with no real political opposition and quick crackdowns on speech that criticises the government. In the United States? Not so simple.
But everyone agrees that something needs to be done. One idea is to raise the full retirement age for Social Security, which is currently 66 and a half, or 67 for most of us. One more is taxing people who make a lot of money more. But most Democrats are against raising the age of retirement, and most Republicans are against tax hikes. Also, letting more people come to the US to work and pay taxes would be helpful. That being said, this is also a political point of contention.
Like a Chinese restaurant’s menu, something from both Column A and Column B might be the answer. But our leaders would have to do something that China’s one-party Communist government doesn’t have to do: they would have to compromise.
