Retirement can be a great joy if you can figure out how to spend time without spending money.
1935 was a momentous year for retirement in the USA. This was the year that FDR signed the Social Security Act, and it changed old age for Americans. This is because retirement was virtually non-existent except among the aristocratic classes. Basically, you worked until the day you died which was usually around age 65. For those who had the misfortune to live beyond that, Social Security was a scheme to idle them in order to free up job spaces for the younger unemployed. The problem is that Social Security created an expectation for people, and they started living longer almost as a consequence of the desire to enjoy all that Social Security. Other problems emerged which I will detail in the remainder of this essay, but Social Security had the damaging effect of taking retirement from a rarity to becoming a virtual human right. People expect to retire and demand it. They also expect to retire at a comfortable level of income and lifestyle. This is the myth of retirement. The myth of retirement is that you can spend 20+ years in idleness without a diminished income or lifestyle.
This essay is basically a prose version of the hard data found on this webpage over at Statistic Brain. The average length of retirement is 18 years. You will need half a million dollars to have an annual income of $36,000 per year, but this assumes an annualized return of 6% with a 2% inflation erosion. The average savings of a 50-year-old is $43,797. Now, Social Security helps a bit, but the fact is that most people save too little, spend too much, and have unrealistic expectations about retirement. Social Security is also in trouble along with Medicare. Medical costs will wipe out most savings assuming that you have some. And as 2007 showed, an economic bust will have your old bones back working again. The idea that you can spend 20 years or more not working and not end up eating Alpo is not realistic.
For most people, retirement is not going to happen. For others, retirement will happen, but it will not be on terms they desire. Imagine a trailer in a mobile home park, days spent clipping coupons, and the highlight of your day being the milking of the senior citizens coffee benefit at McDonald's. I see this now among retired people who left the workforce on better terms with a robust bull market, a full pension, and Social Security/Medicare. Those terms will not be there for GenXers/Millenials. As for Boomers, they are already feeling the pinch, so they are opting to delay retirement because they like spending money and/or not eating Alpo. How did things get like this? This is because things were never like this.
Before Social Security, people worked until the day they died. They had large families, and they counted on their children to tend to them when their bodies gave out. Having many children spread the burden, and the shortened period of "retirement" was the year or so it took for the old timer to die from their infirmities usually being a form of black lung/mesothelioma/emphysema from working in hellish industrial environments or just sucking on the air in a smoke filled office. If retirement was longer, children liked having extended family to tend to their own children. All things considered, it was a good system which existed for thousands of years in many different countries. In some countries, these practices still continue today.
Social Security cut these familial bonds. When old people could get on the dole, the first thing they did was stop being nice to their kids. "Take care of your own brats!" they yelled. The next generation responded by having fewer kids of their own. This is because children eat up money that will be needed for retirement. This naturally eroded the base for Social Security as the Baby Boom turned into the Baby Bust. Then, those Boomers were even worse to their children pushing them to turn to student loans for college instead of seeing that their children had the same start in life that their Greatest Generation parents gave them. The generational conflict is now coming to a head as children tell their parents to enjoy eating Alpo as the children learn to get by on eating their own Alpo in their twenties and thirties. Those people now abstain from marrying and starting families altogether. Government social planners now look to Mexican immigrant families to plug the hole in Social Security.
If all of this sounds gloom-and-doomy, I am glad. The error here isn't in low savings or the Ponzi scheme of Social Security so much as the issue of retirement itself. Able bodied people should not retire. Social Security is just welfare for old folks, and government welfare in all forms has the nasty habit of destroying families. Women on food stamps like having kids out of wedlock. Similarly, government funded retirement makes parents nasty to their kids and kids nasty to their parents. And retirement would be defensible if these old people were sickly and unable to work. But Boomers are robust enjoying lengthened lifespans and doing crazy things like running marathons and climbing mountains and surfing. Yet, these people can't work a job?
The good news is that it has never been a better time to be old. Thanks to improved working conditions, better medicine, and knowledge about diet and exercise, people in retirement years are living longer and better than ever. I have this crazy idea that these people can keep working until age 70 or beyond. I know. This seems nuts.
I admit that there are some people who because of injury and disease are unable to work. I think these people deserve some form of assistance. But this is not called retirement but disability. And it doesn't always hit north of age 65. I know of a man who was clearly disabled with a blood disease in his fifties and was dead by 60. His fill in on his job was a 75-year-old robust man. I think Social Security should be abolished except as a disability program. It bothers me that people with injuries and disease should work to provide an income for others who are out hitting the beach and living the good life in their golden years.
I despise retirement. It is inimical to health and virtue. It destroys families. It makes people greedy and lazy. As a social program, those with a brain and a calculator can see that when there are more people in retirement than in the workforce, something is going to bust. The answer then will be a raise in the retirement age or forced euthanasia. If abortion was the answer to welfare moms, euthanasia will be the answer to welfare geezers. Forced exit is always the final solution to government problems.
On the individual level, I would tell a person expecting to retire to postpone it until it is unavoidable. In the meantime, live a healthy lifestyle, live simply, and keep working. Work is good for you. It's like exercise except they pay you to do it. Your body and brain might give out by age 80, but a sedentary ten years is easier to prepare for than a boring thirty years. As for me, my intention is to be carried out of my job in a bodybag. Retirement is for wimps.
On a family level, I would tell people to have more children and be nice to them. Help them to succeed in life and help them raise their children. See children as assets instead of liabilities. When you are old and full of years surrounded by your kids and grandkids who love you, you will feel more social security than any government check could ever provide. Remember, it doesn't matter if it is Social Security, pensions, or a portfolio of stocks and bonds. Your golden years will always depend on the next generation. The only thing Social Security enabled was for old folks to be nasty to their kids and stop having them. Unknown to them, they were pulling their razors across their own throats. I hear there are wonderful recipes for Alpo.