It is the received wisdom that “working age people”, those between 18-60 years of age are the productive resources in the economy. Those above and below this age threshold are considered to be unproductive from an economic perspective.
That is only partially true. Children can be said to be economically unproductive till they reach the working age. They are dependent on their parents financially till they complete studies and start working.
However, retired people are not exactly in the same boat. They have worked and contributed their share throughout their working life. It is wrong to think that after retirement people do not contribute to the economy – for they contribute even after they retire. Many people have created a good retirement corpus, the use of which creates a salutary positive effect on the economy.
They indulge in many activities all of which infuses money into the economy. They spend on travel & leisure activities, gift to near and dear ones, indulge in philanthropy, buy goods, vehicles and homes, spend on health and wellness etc. This is over and above their regular living expenses.
Travel & Leisure – People travel after they retire as they have the time and money to indulge themselves. Their travels can be longer as they are not encumbered by their work, education of children or other constraints. This spending by retirees greatly contributes to the economic activities in the travel and tourism sectors.
Purchase of goods, vehicles, homes – People in the retirement phase too buy white goods, they own and change vehicles and buy & renovate homes. All these activities infuse money into economy and contribute to the growth.
Philanthropy & gifting – Many in the retirement phase gift their children and other near and dear ones. They in turn use it to buy homes or for other purposes. Also, many in the retirement phase indulge in philanthropy, which puts money in the hands of various social organisations that can then spend them for causes they espouse.
Wellness – People spend significant amount of money on health and wellness. They spend on Yoga classes/ retreats, body care treatments like massages, rejuvenation treatments, invest in nutritional supplements etc.
Health – A good amount of money is also spent by these people on regular investigations and testing, doctor visits, hospital visits ( which may be paid for by the insurance, but they are paying good premium for health insurance ), medicines etc.
Geriatric care – Some people are unable to take care of themselves and need assistants to help them in their day to day living. This gives employment to caregivers. Such people also take concierge services to take care of their daily chores. Also assisted living homes are coming up which some retirees are going in for. Again, such homes provide the safe environment and services that the elderly desire. Assisted living and Geriatric care are huge employment generators as it is a people intensive business.
From the above representative set of activities that elderly indulge in, they directly and indirectly contribute to the economic activity. It would be wrong to say that retirees no longer contribute monetarily.
There are other ways in which elderly contribute, without monetary compensation. But, what they are doing is invaluable.
For instance, many retirees voluntarily take care of their grand children allowing their children to pursue their careers without worries. On one hand, they are not paid for this service; on the other it allows the children to pursue their career with vigour and benefit monetarily.
Many retirees volunteer in social, religious and cultural organisations without compensation, just as a social service, to give back to the society and to stay active. The amount of money they save by not accepting compensation goes back into activities that these organisations are involved with. There are other retirees who teach children music, impart knowledge on epics, teach shlokas, bhajans etc., teach academic subjects etc.
Hence, Senior citizens contribute directly and indirectly to the economy. Only that their contributions are somewhat different from the others who are in the income earning phase. We need to acknowledge this and stop seeing them in a negative light.
Suresh Sadagopan is the MD & Principal Officer at Ladder7 Wealth Planners and is the author of the book If God was your Financial Planner