A couple of weeks ago, The Economist published a special report on aging. One piece in particular, “Work till you drop,” addresses specifically how retirement will change based on extended life expectancy and the fact that fewer young people are coming up behind us. Brace yourself:
Retirement has been overdone. The original idea was that people should enjoy a bit of a rest after a life at work, but nobody imagined that the rest would stretch to almost a quarter-century. Some countries have already raised their official retirement age; others are debating whether it still makes sense to have a specific retirement age at all. One widely touted idea is to phase in retirement over a number of years. It does not seem like a good idea for people to be working at full tilt one day and twiddling their thumbs the next.
To give you an idea of how much retirement has changed, The Economist points out that the first pension, introduced by Otto von Bismarck, was for workers over 70. At the time (1889), the average life expectancy was 45. Today, the average U.S. life expectancy has reached 77.7 years.
So where does that leave us? We’re living longer, healthier (yes, that’s debatable for some) lives. That’s good. On the down side, we can’t rely on government or private pensions to see us through retirement, both due to the amount of time we’ll be in retirement and the system being stretched to capacity. We’re it. What we save, how we invest, and how we plan will determine what retirement looks like. Instead of scaring you, this change should free you. You know exactly what you’re dealing with.
Perhaps we also need to redefine what retirement means. Few people want to go from “working at full tilt one day [to] twiddling their thumbs the next.” We need to ask ourselves what we value. What do you want retirement to be about? Maybe it’s about working 20-30 hours a week instead of 60-70. Maybe it’s about moving into a smaller home with a smaller yard to leave more time to do things versus take care of things. Maybe it’s about spending more time with the people you care for.
One thing is for sure: we all can’t retire to Florida or Arizona. Isn’t it time we had the discussion about what we want retirement to be instead of waking up one morning and realizing that we no longer have a choice?