Prior to the Industrial Revolution, no one ever retired. Our society was primarily agricultural and you worked the land until you died. If you were fortunate enough to have children, particularly male children, they were there to help you work the land as you aged. The industrial revolution came along and opened up lots of other types of labor intensive jobs. It became obvious that as men (women were not a part of the workforce at this time) aged, they couldn’t keep pace with the strenuous nature of the work. They were replaced by younger, stronger men. This forced men into retirement and most without a pension or any form of income. These older men were forced to find other work, like my grandfather, who continued to work by doing lawn work around town. Life expectancy wasn’t near what it is today, so men, like my grandfather, also worked until they died.
Then along came unions who negotiated benefit packages for workers that included pensions. Also, about this time came the Great Depression and along with it Social Security. Pensions became more mainstream and along with Social Security it became possible for people to “retire” from work completely and maintain a reasonably comfortable lifestyle. This was my father’s retirement. He hasn’t worked since he was 60 and has lived very well off of his company pension and Social Security. He has been able to get up every day for the last 25 years and do pretty much whatever he wanted. Retirement had morphed from forced retirement, from a job you could no longer perform and finding whatever work you could to support yourself in your final years, to stopping work completely and living off pensions and Social Security for your final years. That has been the case for most people born between 1920 and 1945.
The face of retirement has changed again. During the 1970’s and 1980’s unions began losing their power to negotiate for the workers and businesses gained more freedom to change their benefit plans. With the increase in life expectancy it became apparent to businesses that they couldn’t afford to put aside enough money to fund employee retirements that might last 25 to 30 years, so they began making the employee share in the burden of saving enough for their retirement. The amount you could expect (if any) from a pension went down and had to be made up from personal savings or higher Social Security benefits. This created problems for a lot of workers in the middle of their careers. This, combined with some rough economic times and a general “consume now” attitude, left many people short of their retirement needs and they were once again forced to find whatever work they could to supplement their income during retirement.
Now most workers have adjusted to the fact that they are responsible for their own retirement, not only in how they finance it but in how they define it. For the majority of people 60 and under, when they look at retirement, it isn’t about quitting work entirely at 65 like it was for my dad’s generation. It is more about choices and the more you have saved, the better your choices become. Most people now see themselves continuing to do something to earn an income into their later years; they just may not want it to be what they are doing now. People look at retirement as having flexibility to work when they want and play when they want. Retirement may be defined as working without pay as a volunteer, but working and contributing nonetheless.
Retirement has had many faces over the generations. I wonder what it will look like for my grandchildren?
Mike Berry is a Registered Representative offering securities through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Legacy Wealth Management, LLC and Cambridge are not affiliated. Cambridge does not offer tax advice.
Copyright ©2015 Mike Berry. All Rights reserved. Commercial copying, duplication or reproduction is prohibited.
