Baby boomers cause fuss in AOW payments


A lot of elderly people are now in trouble because there is not enough money to provide for all the retired people, the amount of elderly increased a lot in comparison to the amount of people who are active in the labor market. It is now very difficult to create a balance between the amount of money the retired people will receive and the amount of money an active laborer will pay for these retired people. The main question here is how we are going to form this balance without depleting the labourers but remain a good life for the retired people?

The cause of this so called ‘vergrijzing’ is the baby boom. After the 2nd world war it was finally safe to make children. People started reproducing at the same time, but these children got old at the same time as well. After the baby boom, families got relatively smaller also did the establishment of anti-conception contribute to the generations after the baby boomers to be with less children. Healthcare has also improved a lot, especially heart and vessel diseases are a lot more treatable which causes elderly people to live longer. Adding this all up you can say that there is an overload of elderly people, and they are relatively healthy so far.

Because of these baby boomers the balance between the active workers and retired people has been changed. The active workers have to pay more tax to provide all the elderly people for a payment (AOW). This is where 2 parties clash, the active workers do not want to pay too much for these retired people, while these baby boomers are now living short of cash. So the 2 parties both had to sacrifice something, the elderly have to work 2 years longer so the retirement age has been changed to 67 years. The active workers have to pay more taxes. Both parties are very upset about the solutions for this problem, the situation of the elderly is not improving a lot while the workers still pay more money in taxes.

Is there a way that we can balance the economic burden? At first it is very important to enable more jobs so that we can create more active workers. Right now the Netherlands is recovering from an economic crisis, we have to invest more in job opportunities since there are a lot of people who are looking for a job but who can’t find any. Since the harm is already done it is very difficult to come up with a short term problem, this is why the ‘vergrijzing’ is so difficult. I think that the raise of the retirement age was a good idea, you cannot expect that the active workers have to pay more tax while the elderly are not doing something in return. In addition to that, people on average become older which means that they have a longer payment. To make up for the retired people should work a little longer.

We have now seen that when there isn’t  a good balance between the active workers and the non-active you see that payments can come in great danger. This is why I think we should rise the premiums for wealthier people. I think that the strongest shoulders should carry the most weight, by rising the premiums, the payments for the retired people become higher. Of course the wealthier people are not happy with this change but I do think that the care for older people is very important. It might seem like a bad situation for the wealthy, but they will get payments when they are retired as well.

The vergrijzing is a very difficult problem which is hard to solve on a short term. All the changes we can make to solve this problem cause one group to be unhappy, that is why I think that both groups should sacrifice themselves for the sake of steady retirement payments.


LWEO Economie boek

Author: Amber Aerts


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