Don’t Take Retirement for Granted

March 7, 2018

Photo by Niels Steeman on Unsplash


Retirement is a topic that becomes increasingly interesting as we go through life and get closer to time X. However, we are so used to the concept that we rarely even question it, rather, it’s the details that everyone is concerned with – when to retire, where to move, how to plan your finances, etc. Meanwhile, the very concept of retirement is a new one, dating back no more than 150 years. Up until very recently everyone basically worked until they were no longer able to.

Origins and historical development of the concept

The idea was first voiced by Otto von Bismarck, the Prussian statesman who proposed it to the Reichstag. It was a truly radical approach, since, with a few exceptions (military pensions, municipal employee pensions, certain private corporations, such as American Express, personal pensions, etc.), at no prior time in the history of humankind did the state participate in the financial support of the elderly population. It was always up to the family members, if you were lucky, or to the person in question. Eight years after von Bismarck’s proposal, the retirement system was finally implemented by the German government, which aimed to provide for German citizens over 70 years of age. Curiously, that was just about the life expectancy at the time. By the 1920s it wasn’t too rare for major US industries to offer pensions to their workers.

However, it wasn’t until the Great Depression that state-financed retirement became the norm in the United States. In 1935, the Social Security Act was passed, setting the retirement age at 65. Average life expectancy for US males at the time was 58, but the economic rationale behind it claimed that there was a critically low number of jobs available for all of the able-bodied population, so the older segment was nudged out of the workplace. The new law required the would-be retirees to contribute to a public fund, thereby creating a continually replenished pool of money for this purpose.

After the Great Depression and World War II was the time when the median life span increased dramatically due to a generally improved quality of life. It was in the 1960s that the average person in the United States lived long enough to enjoy their hard-earned retirement.

The post-New Deal US pension system was comprised of three distinct elements – Social Security, private pensions, and the personal savings accumulated over the years. However, in the last two decades much of the savings and assets were annihilated by the recession, and the possibility of saving money has become obsolete for many. In addition, 401(k) plans, implemented since the 1980s in place of the defined-benefit pensions, turned out to have a negative effect on the workers’ retirement options.

Current situation

The situation is not moving in a positive direction, as most Americans about to retire realize that it’s becoming increasingly difficult to survive in the later years. For a few decades, there has been a feeling of relative confidence in retirement as an imminent period of deserved rest after a lifetime of toil. Basically, it was taken for granted. However, the retirement of the huge generation of baby boomers, and the financial and mortgage crises and stagnant economy led to retirement no longer being as reliable an option for many people’s future. More and more people choose to work past the retirement age, or adopt the so-called semi-retirement strategy for many reasons. One of them is the most straightforward – most people need the money. Another reason is crucial for the psychological well-being – an abrupt end of career takes a huge toll on a person. For many people, it becomes a breaking point, after which the feeling of irrelevance and lack of meaning in life sets in, leading to depression and personal crisis.

Not many companies are offering a semi-retirement option, in fact, according to HBSC, about 22%of future retirees were offered this choice, and only half of this number accepted. Meanwhile, a much greater percentage of retirees requires supplementary income in order to make ends meet. There are different ways to make additional money, which depend on one’s set of skills, education and experience. These ways range between consulting services and freelancing and stadium greeting, berry picking and working at an Amazon warehouse. In the recent years, Amazon has, in fact, been radically increasing the number of their senior workers who live in their RVs right by the warehouses – because this hard work is actually in demand, which is not a sign of the any improvements in the predicament of a lower or middle-class senior citizen with no significant savings.

The bad news is – Social Security is incredibly inadequate, and there may not be much left of it in another decade. But here is the good news – the digital era makes it easier for any of us, including retirees, to make some money as freelancers and project-based workers than ever before. Art Koff, who created in 2003 believes that at least white-collar workers should be able to work for as long as they want and their health permits.

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