Retirement Outlooks and its effect on Economy

Running head: ECONOMICS 1
Principles of Healthcare Microeconomics
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ECONOMICS 2
Introduction
Saving is an essential factor in shaping economic well-being of individuals and the nation
as a whole. Accumulation of wealth in order to prepare one for future retirement is one major
element that helps in economic savings in terms of future economic preparedness in terms of
dependency ratio. Many employees retire with insignificant savings that cannot help them in
future macroeconomic needs (Dugas, 2011). This paper will explore trends in gloomy retirement
outlooks and its effect on economy.
Retirement outlooks and its effect on Economy
Workers need savings to help mitigate uncertainties that includes family dependencies,
expected increase in prices of goods and services, job loss, and increase in investments. Shortfall
in savings is a greater economic predicament to both the retirees and the households since it
leads to increased dependency ration. According to Dugas (2011), the number of workers who
are not saving for future retirement increased from 22 percent in 2010 to 27 percent in 2011. This
shows a greater percentage in terms of non-saving population in an economy. Increase in non-
saving ratio in an economy leads to future reduction in consumption in order to accommodate the
financial needs of the retirees in the economy. As a result, there will be increased dependency
ratio on the government to increase its expenditure on the social security provision thus leading
to an increased budget deficit.
Economy that promotes investment through saving is a stabilized economy. However,
with increased non retirement financial plan, households will be forced to service their basic
needs while it will be impossible to finance long term investments that lead to economic growth.
As a result, with no earlier savings, retirees will therefore be regarded as old-age dependency