The retirement system is broken. Most rapidly ageing developed countries try to balance the budget by increasing the retirement age —widely unpopular leading to massive unrest such as in 2023 French or reversal in Poland. Is there a chance for a better solution that would be attractive to voters and better for the economy?
In this article, I brainstorm better policies. Primarily for Poland’s upcoming election in 2023, but they are applicable in most countries. Be inspired, and feel free to use it.
The Case for Sabbaticals Over Traditional Retirement Age
We all want to live a better life. The awesome Kurzsagt video What Are You Doing With Your Life? The Tail End is an excellent primer. In the current system, after education, we spend 2000 weeks on a job to have 780 weeks free in retirement.
Betting on having the majority of fun in retirement is risky. Studies do not show a significant boost in happiness that depends on working after retirement. Other factors play a much more substantial role.
Though a more extended time off, up to a year, during your working age works exceptionally well. There is extensive research on the transformative power of sabbaticals—communities, such as The Sabbatical Project. However, extended time off is an unaffordable luxury for most people.
So if sabbaticals work way better than staying longer in the workforce, why not offer this option?
The Better Deal
After working full-time for at least five years, you can take extended paid leave financed from retirement savings. In return, you voluntarily agree to increase your retirement age.
For example, you can take three months extra paid leave while you are 35 by agreeing to increase your retirement age by one year.
|Age||Sabbatical length||Increase in retirement age|
|35||3 months||1 year|
|45||6 months||1 year|
|55||1 year||1 year|
I assumed a compound interest of 5%.
You can combine that with other leaves or extend it with your savings, but the policy aims to provide universal access to sabbaticals. You can take a few of them at different lengths, though there would be a cap on the total increase in retirement age.
The goal is flexibility. Whether you like to use that time to explore the world, build bonds with your family or brainstorm a new project is up to you.
The new Polish government should pass universal sabbatical law within 100 days after the 2023 election.
Poland will age rapidly, with one of the lowest retirement ages for females. Yet it would be politically impossible to change the mandatory age. We’ve already tried, and it got reversed.
We should offer a voluntary scheme that could become popular because it is a better deal.
This is an example of innovative policy and government level. Countries control 41% of GDP, but the public sector needs more innovation. Poland has already imported most battle-tested policies, such as feed-in tariffs. The era of catch-up growth is ending. For further progress, we need the courage to lead.
The retirement puzzle is yet to be solved, but sabbaticals seem to be our best chance for a win-win solution:
- Optional. Easy to pass in democratic country.
- Take small gratification now to motivate for the long-term. Avoid burnouts.
- Encourage saving for retirement by running a test earlier in your life with your estimated pension.
- Encourage innovation and startups by giving space to explore.
- Increase happiness.
Once a significant nation proves the sabbatical model works, others will follow.
401k contributors, we are waiting for you, but it’s time for Poland to lead.