For most of human history, there was no such thing as retirement. Old people were revered, worshiped, or (in some Himalayan cultures) eaten out of respect and to gain the delicious powers therein. In the stone age, you worked until you were about 20, then died of either old age or, presumably, a run-in with a saber-toothed cat.
In biblical times, old age become more commonplace, but was still rare. The belief was that you worked until you died or could no longer work. But, not before you first went to less manual labor, like prophesizing, teaching, or specialized services.
Around the B.C./A.D. transition, the Romans began paying pensions to troops who had served for more than 20 years. The troops-to-pensioners concept took hold in other countries, as well, with Brits pensioning military officers in the 16th century (and later enlisted men), and the U.S. pensioning Civil War wounded veterans (both for the North and the South).
The first known public sector pension was reportedly granted in 1684, when a London Port Authority employee was given a pension at half his pay—deducted from the wages of the man who replaced him.
In 1889, in an effort to appease German workers and to undermine the incursion of the alluring Socialist Marxist movement across Europe, German Chancellor Otto Von Bismarck signed into law the Old Age and Disability Insurance Law of 1889. This was essentially the trailblazer for modern-day social security. The program conferred a government-paid annuity to any applicant who reached 70 years of age. Bismarck was no fool, mind you, as the life expectancy in Germany in 1889 was but 45 years. In one fell swoop, though, Bismarck established a precedent that government would fund annuities for the elderly while simultaneously establishing an arbitrary age (70, in this case) when one was considered old enough to qualify.
Around this time, across the pond here in the U.S., about 78% of workers over the age of 65 continued to work or were looking for work. Because the U.S. was still primarily an agrarian society, putting the old man in the coop to gather the eggs didn’t harm the farm all that much. However, as the U.S. continued toward becoming a manufacturing powerhouse, elderly workers became more of a liability, dropping wrenches in the works and whatnot. This was brought to light in several ways, such as the 1882 book The Fixed Period by Anthony Trollope. The Fixed Period was essentially the 1984 of the 1800’s, Trollope envisioned a society where those over sixty years of age would be sent to a commune for a year of elderly reflection, and then humanely chloroformed so their estates could pass on to heirs that could make them productive. Doubly beneficial, Trollope thought, as this would open up employment to younger folks, as well as preempt a more conventional method of inheritance—patricide.
In an address at Johns Hopkins University in 1905, University founder William Osler made the call and declared “the uselessness of men above sixty years of age,” and urged his audience to consider “the incalculable benefit it would be in commercial, political, and professional life, if as a matter of course, men stopped working at this age…”
As demeaning as Osler’s language sounded, it seemed to take root when it was most needed. The Great Depression saw many changes in our societal landscape, but the elderly’s undying need to work kept younger workers severely unemployed. Nonetheless, the old geezers would not go quietly, leading to a widespread realization that the concept of retirement would be a necessary adaptation in the workforce. This was codified, as we all know, by FDR with the signing of The Social Security Act of 1935. Similar to Germany’s Old Age law, old age annuities would be funded by current workers and one could begin drawing benefits at the established retirement age of 65.
With a work-starved population and a life expectancy of only 62, the “1935” version of Social Security was solid, with 50 “paying” workers for each beneficiary. But, as life expectancies now hit 80 years and with baby-boomers retiring en masse, the ratio is only 2.7-to-1, even as the retirement age has slowly climbed to now 67 years. When I eventually draw benefits, in 2050, the ratio will be an even 2-to-1. Two years ago, for the first time ever, the Social Security trust fund paid out more benefits than it took in, leading to the actuarial estimate that the fund will be depleted by 2032. Without adjustments in payments or benefits, from 2032 onward, benefits will be limited to current payments only—which would result in a reduction in benefits of about 25% from status quo levels.
An Arbitrary Construct
The passage of the social security act was the motion that drove the concept of a retirement. From that point on, retirement communities sprouted up in Florida. By 1940, the number of golf courses in the U.S. tripled from 8 years before. The AARP was founded, and their magazines have graced coffee tables and doctor’s offices ever since. But, let’s step back a moment. What is so significant about the age of 65? When somebody retires before 65 (the government professed retirement age), they are thought to have “retired early.” After 65? You’re retiring late. The problem with that, though, is that we’re playing by a decades-old rule book. This is akin to the NBA banning dribbling, shot clocks, and using peach baskets instead of nets—just like Naismith intended.
The ability to amass significant wealth at far greater speed is much easier today than ever before. Real worker productivity has increased 325% in the last 70 years, meaning, for every four widgets my great-grandfather could build in one hour, I can build 17. I can support my entire family on just 30-35 hours a week of (rather easy) desk work in a very expensive locale. So, why on earth are we still assuming it takes until age 65 to amass enough wealth to retire?
There is no “early” retirement or retiring “on time.” You should be working, hoping, and living to retire as soon as is humanly reasonable. Frankly, I’m not sure why this isn’t the topic of every water cooler conversation at every office in America. Is there some other lifetime that you’re setting aside to do all the things you want to do? It baffles me.
Throw away the rulebook. My retirement age is 34; anything after that, and I’m retiring late.
Thanks for reading!