For most of human history, the concept of retirement didn’t exist—you simply worked until you physically couldn’t anymore. The modern version of retirement was actually a political invention from the late 19th century. The modern concept is widely credited to German Chancellor Otto von Bismarck. In the 1880s, Germany was facing a rise in socialist sentiment among the working classes. To stave off a potential revolution and keep workers loyal to the state, Bismarck proposed a government-run pension system. He set the retirement age at 70 at a time when the average life expectancy was only around 45. Bismarck wasn’t necessarily planning for people to enjoy decades of leisure; he was making a calculated bet that most people would die before they ever collected a cent.
In the United States, retirement became official with the Social Security Act of 1935. During the Great Depression, unemployment was so high that the government needed a way to encourage older people to leave the workforce so younger men could take their jobs. When designing Social Security, planners basically split the difference: they felt 60 was too young (too expensive) and 70 was too old, so they landed on 65. In 1935, the average life expectancy of an American man was about 58. Like Bismarck’s plan, the system was originally designed for the minority of people who outlived the average lifespan.
In short, retirement wasn’t invented to give people a “vacation” at the end of their lives; it was a tool used by governments and industries to manage the labour market and maintain political stability, and it is time for us to move on from this concept. Most people like to stay busy and relevant. Life expectancy has increased dramatically and with advances in medical science it continues to increase. With the advent of Artificial Intelligence the way we apply ourselves in the workplace has changed forever. If you need a computer to do even part of your job today, AI will require you to re-invent yourself over the next few years, but that should not come as a depressing future prospect.
The definition of “work” is already changing from something we have to do to generate an income and save enough for a specific future date called ”retirement”, to a lifestyle you love that can be monetised. The old saying, “If you love what you do, you won’t work a day in your life,” is not only more relevant now than ever, but also crucial for your financial future. For those of us who have already reached the end of our income-generating years, retirement will remain relevant, but for people who are only starting out on their income-producing years, retirement should not be part of their vocabulary.