Retiring the Idea of Retirement
The concept of retirement, as we understand it today, is completely outdated.
Wait a minute, did I say completely outdated? I mean completely, ridiculously, totally, absurdly outdated. It wasn’t a good idea when Otto Von Bismarck, the chancellor of Germany, cooked it up, and it’s certainly not a good idea now.
In 1881, Bismarck designed a plan for retirement, hoping to defuse a threat from Marxists, who were gaining popularity throughout Europe. The plan was carried out in 1891 with the age initially set at 70; it was lowered to 65 in 1916. At the time, most potential pensioners would be dead by 65. Smart politics then, perhaps, but bad policy now. If you reach 65 today, according to the Social Security Administration, you can expect to live around 20 more years. But we can’t exactly blame Bismarck for not being forward thinking enough — it was 135 years ago!
Today, the archaic notion of retirement has morphed into this: Work for 40-50 years. Then, have a party, get a gold watch, go to the beach, sit down in a reclining chair with an umbrella drink and get ready for an exciting 20 or so years of golf.
Unless you’re really into golf, it should come as no surprise that one study found that “retirement increases the chances of suffering from clinical depression by around 40 percent, and of having at least one diagnosed physical illness by 60 percent.” I’m sure many of you are nodding your heads in agreement.
In all my years of working with clients, I can only think of two people who wanted to retire in the traditional sense. Even then, both stayed deeply committed to doing volunteer work, more or less full time, throughout their retirement. So, I have worked with precisely zero individuals who went from full-time work to full-time leisure at 65.
What I have seen over and over are people planning creatively for other options later in life. It often involves scaling back a bit, or even changing careers around 55 or 60, but still working for 15-20 more years.
My friend Bill, for example, worked in the emergency room and loved his job. But in his late 50s, he wasn’t sure he could handle the intensity. He cut back on his shifts and started teaching more at the medical school.
Then there’s Jill, a corporate travel agent. She hated her job but didn’t think she could afford to retire for at least 10 more years. Rather than grit it out until the gold-watch party, she started looking for other options. She found a job that paid a lot less, but it was enough to cover her expenses. She’s enjoying her work, being active and contributing to the world. While she isn’t saving anything, her retirement account is going mostly untouched. That’s what you call a win-win.
If you can find a way to extend your working life by a decade or more, even with part-time work, you give your retirement account that much longer to grow. In many cases, I’ve seen people “retire” from jobs they hated a decade or more earlier than they thought financially possible. The income from meaningful work was enough to cover their expenses. Often, these “retirees” can’t keep saving for retirement. But they also don’t need to spend their retirement savings. Don’t underestimate the effect of another decade of compound interest at that point in your life. It’s a huge deal.
The real icing on the cake is this: If you realize that you aren’t going to retire, then maybe you don’t have to keep working at a job that’s slowly driving you insane. For many people, retirement is the light at the end of a deep, dark tunnel called a career. So what if we flipped the paradigm and the end goal wasn’t to stop doing the wrong kind of work, but to start doing the right kind of work? Just imagine how liberating that will feel.
Or maybe that long-awaited retirement party, the gold watch, and an umbrella drink on a beach is enough to keep you satisfied for 20 years. And hey, there’s always golf, right?
This column originally appeared at the New York Times on December 12, 2016.