The Case to Never Retire

The definition of retirement is:

“Withdrawal from one’s position or occupation or from active working life.”

I can safely say that I don’t believe in this traditional form of retirement. It’s that last part that gets me. Withdrawing from active working life. But we’ll come back to that.

First, some history.

In the late 19th century, the president of Prussia, Otto Von Bismarck, had a problem. His socialist opponents were gaining momentum—putting more pressure on him to make a policy shift. Back then, the concept of retirement didn’t exist. If you were alive, you worked—probably on a farm. In an attempt to halt more radical alternatives, Otto proposed a change.

The policy can be summed up in a letter written to the German Parliament:

“Those who are disabled from work by age and invalidity have a well-grounded claim to care from the state.”

Every employee, employer, and government member was required to participate and contribute to a group fund that would support “age-disabled” citizens. The retirement age set by the German government was 70 years old, which conveniently aligned with the life expectancy in Germany at the time.

While Germany enacted the initial form of socially supported retirement to be widely available, it wasn’t close to the first.

The Roman Emperor, Augustus, created a pension plan for Roman soldiers who had served at least 20 years—financed by taxing the Roman citizens. Many countries in Europe provided pensions to soldiers in the 16th century. The U.S. government created a pension for Union veterans during the Civil War. The southern states did the same for Confederate soldiers. The Civil War pension plans provided the framework for America’s Social Security Act 70 years later.

Companies and some municipalities in America had started providing pension benefits in the mid 19th century. American Express was the first private company to offer a pension to its older workers in 1875. By the 1920s, many American companies and industries were offering retirement benefits. Most of these programs defined the retirement age as 65—including the U.S. Social Security Act of 1935. The life expectancy in America at the time was 58.

As farming jobs gave way to factory work, harvest seasons were replaced by year-end budget reports and efficiency metrics. It became widely accepted that the older workers just couldn’t keep up. Companies were motivated to get older workers out of the workforce to pave the way for the younger generation.

In 1905, co-founder of Johns Hopkins Hospital and prominent physician, William Osler, referred to people over 60 as “useless” in the workforce. The irony of course being that Osler himself worked until his dying day at the end of 1919. He was 70.

}Incentives for greater labor efficiency paved the path to the current mindset of modern-day retirement. It went from being forced upon a reluctant older population to being an expectation of the generations that followed.

The Game Has Changed

The concept of walking away from active working life and off into the sunset at 60 or 65 made a lot more sense when your actual life didn’t last much beyond that. The life expectancy in America in 1950 was 68. Now its close to 80. U.N. data projects that by 2050, that number will increase to over 83.

According to The Society of Actuaries, a non-smoking 65-year-old man has a 43% probability of living to 90. For a 65-year-old non-smoking woman, the probability is 55%. Those numbers will most likely only increase.

On top of increased longevity there is the decrease in the physical demand of the average career. Just like there was once a transition from farms to factories, we are now seeing the transition from bodies to brains. According to the Organization for Economic Cooperation and Development (OECD), the number of knowledge workers—people paid for their brain power—in the United States was around 40% in 1970. That number today is estimated to be 60% today. Simply put, the average worker today has far less demand on their body.

Traditional retirement was invented during a much different time. The rules to the game have changed even if the way it’s played hasn’t caught up yet.

The Dark Side of Retirement

If you asked someone on the street to describe retirement, I bet you’d get some version of relaxing days filled with sitting on a beach, golfing, or traveling. But the reality is not always as rosy.

According to U.S. Health and Retirement data, retirees are 40% more likely to experience a heart attack or stroke compared to their working peers. Retirement also increases the chances of clinical depression by 40%. The chances of being diagnosed with at least one physical condition increase by 60% in retirement. Data show that retirees struggle with high rates of anxiety. The divorce rate for couples nearing or in retirement is 9% higher than the national average.

There are multiple causes you could point to—and many probably haven’t been fully figured out yet. However, it seems clear what some of the big ones may be. When you retire it’s easy to feel a loss of:

• Structure
• Relationships
• Purpose

To the first one, Dr. Randall Paulson warns:

“During the phase of going from a lot of structure to almost no structure; people can exhibit the same signs as someone that is overworked.”

Sometimes you’re thinking so much about getting away from the feeling of being overworked that you swing completely the other way. Often, that can leave you right back where you started.

Oftentimes, the ability to make money provides a sense of meaning and purpose. Don’t underestimate the impact when you no longer have that in your life.

A Better Way

Larry Swedroe once wrote about the ideal retirement:

“It is a time in your life when you are full of energy and contented at the same time. Your life is full of close relationships with family and friends; you are contributing your time and resources to helping others; your days, weeks, months, and years are filled with activities that you love, that help you grow, and that are just plain fun. You awaken each day with a sense of purpose and a positive attitude. You have the resources and general well-being to live the life that makes you happy and can foresee living it well into your future. You take advantage of new found opportunities and you deal well with life’s inevitable setbacks because you are resilient and have a plan that helps guide you through them.”

That sounds amazing. Who wouldn’t want that? But even a better question; why do you need to retire to get it?

Someone who achieves what Larry describes is someone who found balance over burnout. Retirement is not a requirement for that balance to be a reality. In fact, sometimes it’s the exact opposite.

Investor and philosopher, Naval Ravikant, once said,

“Retirement is when you stop sacrificing today for some imaginary tomorrow.”

To me, that means “retirement” is probably a lot closer than you think. It’s more of a shift in focus—a mindset—than it is an arbitrary dollar figure.

Let me be clear; I’m a strong advocate for planning ahead and saving for the future. That will always be a good idea. But maybe you should be looking to reframe the concept of retirement altogether. Instead of thinking about it as withdrawing from active working life some far-off day in the future, you could look at it as a lifelong transition that’s happening right now. You’re better off striving for an ideal lifestyle now rather than a traditional retirement later.

My advice is to find work you love. Work that brings meaning and purpose. Work that allows you to focus on close relationships. Find a career that gives you energy and brings contentment. And then never retire.

Here’s to making money matter!