Rethinking Retirement?
What exactly is there to “rethink” about retirement in America? You work hard, save, put in your working years and around 65 you retire. Sounds pretty good. Plus, isn’t this the way it has always been?
Most are surprised when they realize that the way retirement works in America is an extremely new phenomenon not just within U.S. history but in human history. Human history has always had to contend with the reality of how to support people once they are mentally or physically past their working and productive years. This will always be the case since it requires some sort of resources to provide for the needs of those no longer able to do so.
Historically, there has been some sort of social/familial support system in place. Traditional cultures tended to lean heavily on family with the younger supporting and caring for older family members. Religious and other social enterprises took to caring for, to borrow from the Bible, the poor, the widow and the orphan. Even income producing things like certain types of Annuities that pay you monthly income for life can be traced back to Ancient Rome.
In the modern age, much of this type of post-working years support remained largely in place with family systems of support being primary. It wasn’t until the late 1800’s in Europe where we started to see the first shifts towards our current system. Prior to then, productivity for as long as possible, often in a more rural, agricultural and familial setting, was the norm. The nature of work and jobs changed following the Industrial Revolution. Agriculture gave way to manufacturing. The family farm gave way to the corporate factory.
These changes began to make way for our modern notion of retirement. Near the end of the 1800’s, German Chancellor Otto von Bismarck initiated a type of mandatory retirement in response to young people being unable to attain jobs because older people were not leaving the work force. Why didn’t older workers leave the workforce? They had no other means of providing for their needs financially. The state would enter in and begin providing money for those that voluntarily left the work force or that were unable to work any more.
A few decades latter, amidst the financial turmoil that marked much of the early part of the 1900’s, America began to adopt similar strategies with the government stepping in to provide income in the early forms of Social Security. These changes in the west began to shift the idea of retirement from being an impossibility to being mandatory/non-optional to being a viable option for older people. This '“blip” in human history of viable retirement set the stage for the next and current phase of American retirement.
Following World War II and the dawn of the Baby Boomer generation, a new type of retirement began to emerge. I like to think of this time in human history as a type of branch in the human timeline where what began to happen was something of an alternate universe from the normal course of humanity. For the first time “entitled retirement” emerged on the scene and it only could have happened here and at that specific time in history. The American spirit was alive. The American Dream became the standard. Cost of living was low. Government support was there. There were no Retirement Accounts aside from the occasional pension. Life expectancy was still on the shorter side. This is the perfect combination.
It is important to remember that last point. The age of 65 began as the retirement for a simple reason - people simply did not live much longer past that time. Therefore, there were only a few years of financial support required for retirement. This will prove to be one of the key factors for us in rethinking retirement today.
“Entitled Retirement” became the norm and the expectation. It worked for that time. By the time the Boomer generation was the dominant workforce in the 1970’s and 1980’s, an entire system was now set in place to support the idea. This new found form of retirement was what we now think of as “the way it has always been.”
The danger in thinking either “it is the way it has always been” or “it is just the way it is” can be that we fail to take a critical look at what has been built.
The unusual newness of American retirement should cause us to stop and ask a question that almost no one seems to be asking, “Is this good?”