Many adults eagerly look forward to their “Golden Years” and one of the key features of this period is retirement. It is easy to imagine golf courses, beaches and time to catch up on reading lists. In reality, many older adults continue to work after age 65. The entirety of South America is undergoing a demographic shift due to an aging population. Thus, many countries are re-examining their existing government pension systems. While it is important to provide economic security in old age, it is also crucial to allow continued avenues of employment and meaningful engagement with society for older adults.
The quality of life in retirement is dependent on the financial resources of the individual. Adults aged 65 and over generally have income from four sources including government funded pensions, private pensions from employers, savings and employment. In the United States, adults with higher education and income potential will often remain in the workforce past age 65. In contrast, adults with lower income levels in low- and middle-income countries remain employed past age 65 to stay out of poverty.
There is a huge variability in percent of the aging population that is working in Latin America. Some Latin American countries, such as Brazil, Argentina and Columbia, have relatively low participation of older adults in the workforce. Such countries are similar to the United States, with only 10-15% of adults past age 65 engaged in paid work. In other countries, such as Peru, Paraguay and Ecuador, 40-50% of adults age 65 and older are still participating in paid work. These countries also have relatively low coverage levels by government and private pension plans, but the correlation between working and government funded pensions is not perfect.
Many countries in South America are re-examining government pension programs to accommodate the aging population. Recent reforms in Paraguay have instituted new rules that prevent individuals collecting government pensions from participating in paid work. Better pension systems may provide more security for older adults, but preventing work has problematic implications for the future role of older adults in society. Social engagement is correlated with improved health and employment can be a meaningful avenue of engagement.
Building strong government and private pensions that will allow a retirement free from financial hardships or poverty is important. However, building systems that prevent older adults from working is equally problematic. Older adults in countries with strong pension systems, such as the United States and Britain, are fighting to re-enter the workforce and be productively engaged in society. It is important that South American countries do not build a pension system that prevents older adults from contributing paid work to the economy.