Thursday, February 11, 2010

Preparing for forced retirement

My analysis of the job market conditions in the sector that I work in is not optimistic. I am an engineer working in the consumer electronics industry - it is an industry which churns out products that are cheaper, better and faster every year. I am proud to work in this industry as an engineer.

The pace of technological change is very fast. In fact, that was one of the reasons that attracted me to work in this sector when I was a fresh graduate because I thought that was fun. It is still fun but it is bad economics. When the body of knowledge in your field of expertise changes too fast, the number of years of work experience do not count as much. Worse still, the experience becomes close to worthless if it is obsoleted by a superior technology. The value gap between someone with 2 years experience and 10 years experience is not that great if the technology/business landscape changes too drastically. Meanwhile, the salary gap between the 2-years and 10-years experience workers widens. When a deep recession hits, the older worker will have to live in fear of losing his rice bowl every day.

I have seen a distressed older worker getting emotional over such issues during meetings in my very eyes. I was a young man then and it was my first job. It disturbed me personally then and it got me interested in my own future social security.

(By the way, if you are interested what happened to that distressed older worker, he kept his job while I lost mine - my first job. Maybe I will talk about it in another post.)

Globalization is a phenomenon that worsens this problem. With globalization, a younger, cheaper worker in a foreign country need not migrate to your home country to take away your job. He can stay at home and still take away your job by attracting employers to shift work abroad.

When you talk to financial advisers, one common advice is to start planning for your retirement now. I think they are not keeping with the times. Planning for retirement is a luxury for me. I have to start planning for FORCED retirement, not just retirement. Forced retirement means losing one's job at an awkward age - old enough to be discriminated by employers but not old enough to retire in the eyes of the government (cannot collect pension, retirement savings like CPF ...)

Risk-averse as I am, I have to put my money at risk to grow it faster. Friends who know me are surprised that I buy stocks. I have no choice. I have to manage my money so that it grows fast enough before the day of reckoning arrives. Meanwhile, I shall save hard and work hard at my job.

1 comment:

  1. I have a nagging suspicion that my concern about early FORCED retirement is happening on a national level now. I will be eager to know the results of NTUC's investigation

    Apr 6, 2010
    NTUC probes labour mystery
    Men tend to retire in their 50s; getting them to continue working will boost workforce
    By Sue-Ann Chia

    THE labour movement aims to unravel the mystery of why a relatively large number of men tend to quit the workforce in their 50s, instead of staying on until the retirement age of 62.

    Official manpower figures show that the labour force participation rate for men dips after age 50.

    There is no data on the reasons behind this dip, a trend which the National Trades Union Congress (NTUC) intends to study in its bid to get more older men, as well as women, to work longer.

    But NTUC deputy secretary-general Heng Chee How suggested on Monday that 'some men may want to take it slow after taking out their CPF at 55'.

    Hence, the NTUC will start a programme in three months' time to encourage both men and women in their 50s to work beyond 62, said Mr Heng at a seminar on re-employment issues.

    The 'Back to Work for Active Agers' programme will be rolled out once the NTUC determines the factors driving people out of the workforce; and works out which industries have the largest exodus of older workers.