What’s my beef with ‘retirement’?

Or is it just me...

In last week’s blog I mentioned my beef with the word retirement.  Let me explain more.

We have been sold the story that we should save and invest responsibly for ‘retirement’. With my financial planner hat on I of course support this very sensible habit.   But is retirement really what life is all about?  The payoff for the delayed gratification of saving today for a future tomorrow?  I think we need to dig a little deeper.

The more relevant questions are:

·       What is this man made construct of ‘retirement’?

·       Who said that 60 or 65 is the chosen age?

A (very) potted history of retirement

Retirement is a relatively modern concept.  Before then if you were alive, you worked!

In the early 1880s the German Chancellor, Bismarck, introduced a proposal for retirement for anyone reaching age 65 and a contributory pension scheme was introduced. The first State Pension in the UK was introduced in 1909 for people living to 70.  It was means tested, payable to those who had lived in the UK for more than 20 years and who were of ‘good character’.  The retirement age was reduced to 65 in 1925 and further reduced to age 60 for women (poor frail things that we are) in 1940.  There have been many tweaks to the state pension since. Today state retirement for men and women is age 67 (with murmurs that this will be increased in the coming years). 

The introduction of state pensions reflected the belief that most people were ‘done’ by the time they were about 60.  Perhaps the beginning of ageism and a reflection that few lived beyond their mid-60s in those days.  In contrast the life expectancy at birth in 2022 (or as at 2022 and the last data set available) is 78.6 years for males and 82.6 years for females.

Is a ‘hard stop’ retirement still relevant?

I question the relevance of a ‘hard stop’ retirement, as many understand it to be, in the age of knowledge work and service industries. 

Of course, I understand that there are many jobs, careers or professions that are physically, intellectually or psychologically impossible to continue as we age.  And that for some, work has always been a means to an end to enable the fulfilment of a long held purpose, interest or passion. 

Equally I think there are a large minority of people who have never questioned retiring at or around age 60, believing departure from work at that point to be an unwritten rule.  To be fair, I have seen many skip with joy to the day they are ‘free’ of the burden of work pressures and responsibilities only to find the feeling is short lived.  Two or three years of travel, golf and the family and the joy starts to wane. 

It is the connotation or the word retirement that troubles me. It evokes a sense of being old.  Passed it.  Worthless. Or maybe that’s just my own ageism. 

What if work is good for us?

Perhaps the questions we should ask are:

·       What are we retiring from? 

·       What are we retiring to?

It is the question of what are we retiring to that has my interest.  Is it to travel? Create? Spend time with the grandchildren? Care for others?  Study? Golf? Move abroad? Build a house? Volunteer? Start a new business? Start a new job?

What if work is good for us?  Maybe not in the intense, pressured, long hours way it was earlier in a career but in a way that is nourishing, purposeful, expanding.  Work can provide purpose, social connections and a community (you may recall the 5 Pillars of Wellbeing I wrote about last week).

Financial independence

What if, instead of saving and investing for retirement, we saved and invested for ‘financial independence’? Financial independence leads to choice.  Choice is an enabler, not a goal in itself.  Once achieved we then have freedom to decide what we do.  Which may be to continue to work in the knowledge that it is not a necessity.  It is a positive choice.  Regardless of what age financial independence is achieved. 

As an aside, there is a whole movement called the FIRE Community (Financial Independence Retire Early) that takes this idea to a different level which is interesting.  The FIRE approach is to save a very high level of income, perhaps as much as 50-70% of income from mid 20s, to enable retirement as early as age 40.  I can see advantages and disadvantages of this approach.

There are of course no rights or wrongs with this.  It is finding a balance that is right for you that is important.

Maybe my beef with the word retirement is just me.  Me being over sensitive and wrestling my own sense of finitude. 

What does the word retirement evoke for you?

I’d love to hear from you. 

Until the next time my friends

Ruth x