A brief history of “retirement”

In the beginning, there was only one retirement plan. Work until you’re dead, or at least until you can’t anymore.

Farming dominated the economy in 1880, more than half of men worked on a farm. Most men worked as long as their health held out. As they started to feel their age they would hand over the more physically demanding tasks of labor to the younger generations. The farming operation was family based with many family members working their entire life on the farm. As the technology evolved and the farming operation became more and more efficient there was no longer room for the entire family to stay on the homestead.

The shift from an agriculture-based rural economy to a primarily Urban and industrialized one by the end of World War I created a society more dependent on a cash wage as a means to an end.

The Great Depression was the longest and deepest economic downturn in United States History. Lasting more than a decade starting in 1929 and ending in World War II in 1941. By 1932 nonagricultural unemployment had reached 34% and national income had dropped 43% per capita. By the mid-1930s the lifetime savings of millions of older Americans had been wiped out and they looked to spend their remaining years in financial destitution.

The United States created Social Security in 1935 and Medicare in 1965. Both are designed as social safety nets to provide economic security to elder Americans. In the 1980s many countries lowered the age at which one could become eligible for the benefits, in part, to clear out the older workers and make way for a younger workforce.

Today, you have governments reversing these policies to stop aging populations from breaking the budget. Social security is currently the largest federal program expenditure making up almost 1/5th of federal spending.

Life expectancy today looks much different than that of the 1930s. Life expectancy at birth in 1930 was 58 for men and 62 for women. In contrast to the present, a male who has attained age 65 is expected to live another 17 years, and female age 65 is another 20 years. Modern medicine & more awareness around health are two of the main contributing factors to longevity.

Every day in the United States, 10,000 people turn 65, and the number of older adults will double over the next several decades to top 88 million and represent over 20% of the population.

Today’s retirees are much different than those of the past. Retirement is no longer a jump off a vocational cliff to collect a modest pension and social security. Retirees have more savings tools available to them and are living longer. With that, there are more decisions to be made that could impact your retirement for the better or worse.

• When can I retire?
• How much risk do I need to take in retirement, if any at all?
• How much can I reasonably spend each year in retirement?
• If I want to retire before 65 what are my options for health insurance?
• How do I protect myself from stock market volatility?
• When should I claim my pension?
• How do I optimize social security claiming?
• How do I create retirement income in the most tax-efficient way?
• Do I need to keep paying for this insurance?
• How do I plan for long-term care and increasing healthcare costs?
• Can I relocate in retirement?
• What if I want to buy a 2nd home?
• Should I take my pension as an annuity or lump sum?
• What will I do in retirement?
• I want to give to my kids or charity, what’s the best way?
• I am receiving an inheritance, how much should I save?
• Does my estate plan coordinate with my balance sheet?
• Will my spouse be okay if I predecease them?
• Where will my retirement income come from?
• How do I deal with required minimum distributions?
• How do we deal with inflation?

These questions among many others can feel overwhelming in the charge up to and in retirement. Working with a Certified Financial Planner can shed light on these and help you achieve the freedom to live your life knowing you have a trusted partner to navigate important decisions as they arise.