Economist Iancu Guta brings bad news for Romanians who will retire in 15-18 years. He expects a decline in the income that retirees will collect compared to the salary they’re used to.
Economist Mihai Morar spoke about this topic on the Fine C Simple podcast.
“Our children will pay the public debt. Is this public debt so heavy? All the major economies of the world are in debt,” pointed out Mihai Morar.
“With a declining birthrate, yes. There will be seniors retiring in 2030, and their numbers will grow exponentially because of the 70s ban on abortion. The mandates! Now we have 5.2 million retirees, and in 2040, we’ll have 6 million. Estimated! We have a lot of employees in the public sector, 1.2 million people, 4 million people working population in the private sector, so we are talking about overestimation. Public apparatus.
And then we have a very low birth rate, which will drop to a historic low in 2022. In the last 10 years, 2 million children were born, but 3 million Romanians died.
And we have something else. Emigration not offset by emigration. On net, we lose 150,000 people a year. Compared to these events, we are the second most depopulated nation on Earth, after Syria.
Putting all the variables into the equation, the mounting debt owed by a shrinking population becomes a problem that can be solved by higher taxes and raising the retirement age. If this phenomenon cannot be reversed through investment policies, to stimulate the birth rate and return people from migration,” explained Iancu Guda.
Bad news for Romanians retiring after 2040: an unprecedented decline in living standards
“Now, the average replacement rate of salary with pension is 75%. According to these demographic calculations, in 2040 it will be 30%, and for some 35%. So someone living on 1000 euros will switch to a pension of 350 euros. . . Suddenly! This is an unprecedented decline in the standard of living. . When we retire, the number of newborns today will be so low that they won’t be enough to pay our pensions,” Ianzu Kuta added.
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