The French government announced they will raise the age for retirement by two years to 62. This move, which will take full effect by 2018, is part of a larger government initiative to combat an out-of-control pension system and reduce the country’s budget deficit.
“Under the plan, which is likely to meet trade union resistance, the minimum retirement age will be lifted gradually to 62 in 2018 from 60, and levies on capital gains, stock options and other investment income will all shift higher,” Reuters reports. And France is not the only European country to take this step in recent years.
Germany recently announced that it will gradually increase the retirement age from 65 to 67. Spain and Greece, two countries that have been ravaged by national debt crises, have each debated raising the retirement age by two years and Greece has actually considered banning early retirements outright.
All of this raises the question of whether the global economic downturn will lead other countries, including the U.S., to follow suit. On the one hand, the U.S. does not provide nearly as many perks to retirees as France does. The Christian Science Monitor reports that retirees actually make more money on average than working people in France. Yet, the U.S. is also struggling to bring order to an unstable economy. France had a national deficit of 7.5% last year whereas ours was 10%.To make matters more complicated, some economists have warned for years that the U.S. may face a retirement crisis beginning in 2011 or 2012, when many baby boomers turn 65. As more Americans begin to retire over the next decade, it will put a strain on our Social Security system.