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The Demise of Retirement

There’s a story of the wealthy businessman, the fisherman and the child.  It goes along the lines of the businessman comes across the fisherman who is sitting on a dock playing a game with a child.  The businessman asks the fisherman why he isn’t out fishing.  The fisherman says he already caught enough fish for the day.  The businessman says the fisherman should go back out, catch more fish, sell them, buy another boat, make more, and then be rich like the businessman.  At this point the fisherman asks what he would do then.  The businessman says at that point he could then really enjoy life.  The fisherman stares at the businessman with a quizzical look and says – What do you think I am doing now?

 

Retirement did not exist before the industrial age.  The concept of retirement picked up speed in the early 20th century with a speech by Dr. William Osler where his thesis was men over the age of 60 years were basically useless to society.  “Take the sum of human achievement in action, in science, in art, in literature,” Osler said.  “Subtract the work of men above 40, and while we would miss great treasures, even priceless treasures, we would practically be where we are today.”  Basically, he said people over age 40 did not contribute to progress.  On top of this, he said people over 60 were “entirely useless and a drain on society because of their inelastic minds.”  Ouch!  There are lots of other contributing factors to the concept of retirement, such as the creation of Social Security, but Dr. Osler’s comments certainly hurt.

 

Something I have noticed, and I bet you have too, is the concept of retirement is changing.  I am seeing fewer and fewer people who plan to completely stop working at age 65.  Most people I talk to plan to cut back their work commitments around that age, however, they will continue to work in some way, shape or form for years to come.  It can be anything from consulting to volunteering, but it is not retirement in the traditional sense.  Let’s look at some recent data too.

 

  • Based on US labor data for the decade of 2000-2010, the number of workers 65+ is growing at 30%.
  • If Boomers were to fully retire there are estimates we would be looking at a shortfall of roughly 30 million workers by the year 2030.
  • 65% of companies surveyed by the Employment Policy Foundation would like to offer a phased-in retirement but say government regulations keep them from doing so.
  • A study done roughly a decade ago showed 93% of Americans feel they should be able to keep working at any age if they are still capable, 64% felt retirement was a chance to write a new chapter, and 46% wanted to move back and forth between work and leisure.
  • The MacArthur Foundation conducted a detailed study on aging and it revealed the three indicators of successful aging are:
    • Avoiding disease and disability
    • Maintaining mental and physical function
    • Continuing engagement with life
  • An AARP study revealed 80% plan to work through retirement years. 67% of the respondents said they would keep working because they wanted to work.  Half of them would either become an entrepreneur or find a new job.

In the Barkley Marathon documentary I mentioned, one of the first-year runners decided to change his life after he watched his father pass away a year before he planned to retire.  Once he made the decision he hiked the Appalachian Trail.  The trend with Millennials is they save at a much higher rate than Gen X and Boomers.  However, they are saving not for retirement but instead for financial freedom and flexibility.

 

Regardless of the data of people living longer, people are deciding retirement should be what they want it to be, not what society says it should be.  If you live 30 years in retirement you will have roughly 11,000 days to fill.  I bet if you meet the same group for breakfast every morning you will have heard the same stories after one month.  So, what are you going to do with the remaining 10,970 days so you can say you are really enjoying life?  Odds are you will be part of the trend where we see a demise of retirement in the traditional sense and instead you will write your own version of retirement.

About Dan Johnson, CFP

I am the President and CCO of Forward Thinking Wealth Management, LLC, which is the flat-fee financial planning firm located in Akron, OH, and set up to work virtually with clients across the country. I charge clients a flat fee of $4,800 regardless of asset size. My firm is a solution to what I feel is a broken system where clients pay advisors based on something out of their control - the performance of the market.
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