Deutsche on the US. This is very likely to come here with consequent calls for ramped immigration, another policy to sustain secular stagnation:
For the first time, the average American worker believes she is more likely than not to retire by the age of 62. That is a problem.
Put simply, earlier retirement requires a larger nest egg. In the last two years households propped up their nest eggs with income not spent during lockdowns and with cash handouts from government. This goes a long way toward explaining why household consumption failed to go as “gangbusters” this year as many expected, with excess savings instead being channelled into safe assets such as US Treasuries. In our view this was hardly surprising. It does not even take a massive shift in preferences for households to squirrel away large but one-off windfalls; there is plenty of evidence in empirical economics that households have always done so.
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The much more difficult question is how households will go about financing early retirement plans now that the windfalls are becoming less plentiful. If they are serious about it, households may need to resort to the old-fashioned way of financing early retirement: reducing consumption and saving more out of their actual work income. Absent continued windfalls, households must be prepared to spend less now if they plan to reduce their lifetime earnings but also want to smooth consumption levels as much as possible.
Perhaps saving more out of work income will prove too arduous for many households planning for early retirement, and they will simply shelve their plans. Perhaps early retirement was just a fancy idea fuelled by helicopter money, rather than a serious change in lifetime plans. But as we have noted before, we would not discount the possibility that Western societies have seen a genuine if marginal shift in preferences from consumption toward leisure, with plans of early retirement being just one manifestation. If so, the new American Dream adds to the risk of the economy slipping back into secular stagnation.