Retirement is a 20th-century invention that has probably run its course. The idea that you should cease work on a given day was invented to remove older, sick blue-collar workers from the workplace. Governments and industry needed these workers to move on to create space for the growing mass of younger workers. By the middle of the previous century, the idea of a leisurely retirement at the end of a long and hard career was actively promoted to entice older people to retire.
However, this model of retirement was predicated on a life expectancy that often didn’t extend much beyond retirement age; retirement seldom lasted longer than a decade or so. In contrast, before the 20th century, retirement as a social norm was almost non-existent - people worked until they could no longer perform their duties. A significantly shorter life expectancy and the concept of a long retirement period simply didn’t align with the realities of the time.
Fast forward to the 21st century, and the landscape has changed dramatically. Today, numerous forces are converging to signal the end of retirement as we know it. People are living much longer and they stay healthier for longer. This means that most people need more capital than they can build during their working careers. Large pension funds offering guaranteed pensions cannot continue to pay the growing number of retirees with a shrinking workforce. Geopolitical changes, demographic shifts, climate change, and technological advances mean more potential variance in return expectations from the norm. It also means that careers are more likely to be disrupted, and adult children remain dependent for longer for numerous reasons. These are just a few reasons why retirement at the normal retirement age of early sixties looks increasingly risky.
In addition, research points to the health benefits of working – not only does it contribute to meaning and purpose, but also to emotional and physical well-being by surrounding you with people and getting you out of bed.
Admittedly, most older workers find it difficult to keep pace with the modern workplace’s rapid rate of change and sustained stress levels. Also, some people love retirement. I have seen many people who have amassed enough capital to take early retirement and make the most of their lives at a more leisurely pace, enjoying everything from art to 4x4 travelling.
The key is to forge your own path. Figure out what you need. Calculate your own measure of ‘enough’. Then you can choose when and how you work. It is better to work for longer, doing what you enjoy and at your pace, than to burn out. A crucial part of retirement planning today is not when you will stop working but how you can best taper off work or change your work so that you can work for longer. Staying relevant and skilled creates options for when the best-laid plans don’t work out.
For an entrepreneur, it may mean delegating more of the tasks you don’t enjoy. For the teacher, it could involve moving to private tutoring to avoid time-consuming administration. It may also mean taking stock of your skills and changing direction altogether. A connection recently pivoted from design to customer experience and loves the interaction with people – he realised that he had missed out on the people part due to the long hours of alone time working on designs.
At Foundation Family Wealth, helping clients think through these options is part of what we do. Our annual free retirement workshop, Do You Have What It Takes to Retire Well? offers an opportunity to set aside time to think about preparing for retirement. We hope to see you there.
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Kind regards,
Sunél