Retirement should be your last breath. If you’re under 45 and think this article doesn’t apply to you – it does.
I plan to work until I die. Whenever I happen to mention it in conversation, the person I am talking to looks at me like I’ve just told them I regularly smoke crack. As a Pretiree, my approach to retirement differs significantly from most others. Why? I don’t believe in retirement. I think it’s a myth and buying into it will put my finances, family and happiness at risk. Here is why:
The Retirement Myth
What we’ve been sold since our first day of work is that if we work hard and contribute to our retirement savings diligently, we will be rewarded with “golden years” filled with time and freedom to pursue our hobbies and dreams. Sounds great! There’s a small problem. Today’s reality is significantly different from the sales pitch. The traditional retirement model worked 50 years ago, but now it is broken. Quite simply – the numbers just don’t add up anymore.
The Numbers Behind Modern Retirement
Advances in healthcare have afforded us longer lifespans made up of healthier years. That’s fantastic, but how do we pay for the additional years we live beyond age 65?
The Simple Dollar points out that when the national US retirement age of 65 was established for the Social Security Act in 1935 (over 75 years ago!), the average American lifespan was 61.7 years. Today, we still think of retirement age as 65, but the average lifespan is now 78 years—16 years more. Also, note that you were likely to die BEFORE you retired back then, so saving wasn’t really much of an issue.
Today, assuming you start working at age 20 and retire at the typical age of 65, you need to save for a minimum of 16+ years retirement. Or, in the case of my grandmother who recently turned 90, she needed to save for 25+ years of retirement. That’s the equivalent of 55% of the total years she worked!
The Economic Realities of Retirement
As our economy shifts from manufacturing to knowledge-based work, people are more likely to change jobs frequently over their careers. The average person will change jobs 10-15 times over the course of their career. The notion of “job security” and staying with the same company throughout your career is outdated and unrealistic. People simply don’t work at places long enough to realize traditional retirement benefits, even if the benefits are available.
Due to current economic conditions, the emphasis on personal responsibility for your financial future has become critical. Mix in questionable social security, stock market volatility and the disappearance of the corporate pension and it becomes clear that the traditional retirement safety net has some major holes in it.
So where does that leave us? For most, the notion of continuing to work after 65 is undesirable at best and a personal nightmare that keeps them up at night at worst. Buying into a model of working to age 65 as a “hard stop” date has other consequences that many tend not to realize until it is too late.
The Consequences of Buying Into an Outdated Model
When we accept traditional retirement as our goal, we agree to exchange our time and energy while we are in our prime for less valuable time and energy when we are older and our possibilities for enjoying our free time are limited. For instance, it is highly unlikely that I would take up surfing in my 60s but I was able to take it up (and enjoy it) in my 30s.
With our eye on retirement at 65, we also agree to focus the majority of our time and energy on work at a time when our family needs us most. In exchange, we are promised a large block of time later in life when our children are grown and out of the house building their own lives. It is also possible that by that time our marriage has broken and we have few friends left because all we learned how to do during our prime years was give ourselves to work and not to each other.
By accepting traditional retirement as our goal, we are also buying into a culturally-imposed “expiration date” of age 65 that is based on a reality that hasn’t existed in 40 years. For example, if someone had spent their years from 18 to 65 doing physical labour in a factory, they would likely be in a position that would render them physically unable to do their job properly and therefore should stop at 65. For the majority of workers these days, this is far from the reality. Some estimates cite the percentage of knowledge workers as high as 45% of the US labour market. Knowledge work is very different from manufacturing in that it is not as physically demanding and tends to be intellectually stimulating and provides us with a means to engage with others.
If 50 is the new 30, then it stands to reason that many 65 year olds are still able to contribute significantly in a modern work environment. If we, and our brains, are vital at 65 why can’t we can keep going if we want to?
In fact, keeping some sort of engagement with the working world might just be the thing that we need to stay mentally and socially engaged in order to fight off the effects of aging.
Changing Our Perceptions of Retirement
Instead of accepting a model that doesn’t fit our reality when it comes to work and when to stop, why can’t we change the terminology and therefore how we think about it? When you break it down, retirement is the most common form of financial independence. Instead of the current all-or-nothing model, why can’t we work toward increasing amounts of financial independence as we progress through our careers and our lives? Why can’t we view financial independence on a spectrum rather than the all or nothing approach that is currently in play?
A New Model to Replace Retirement
If we focus on financial independence through earning, investing and spending wisely then we really can have it all – now AND in the future. The result will be a more fluid mix of work and free time to do typical “retirement” type activities, like travel, pursue hobbies and spend time with those we love. We call it Pretirement.
Retirement as we’ve known it all our lives no longer exists and that’s ok. In fact, the death of retirement might just mean that was have a chance at living more fulfilled lives because we won’t be saving it all until the end like our parents and grandparents did. If that means working a bit more when we’re older, that’s ok too. We no longer have an expiration date for working. We can allow ourselves to ease out of work and into financial independence based on our personal needs and desires, not some arbitrary number.
I personally hope never to retire. I want to continue to contribute until I die. As Loretta LaRoche put it, “retirement should be your last breath.” It’s time to let go of how things have always been done. It’s time to write some new history. Are you willing to accept the realities and make them work to your advantage? If you are, there is no better time to be in the working world. You can choose to pursue your career in any way you choose with no fear of the hard stop. Doesn’t that feel better already?
To living life now,
Shannon & Diana
