Should Retirement Really Be The “End Goal” For Gen-Y?
In the Personal Finance world, the issue of retirement is often either:
- Neglected altogether; or
- Worshiped at the altar
I guess if you had to choose one, you’d usually end up better off worshiping than neglecting. But are these really our only two options? After all, who exactly made “Retirement” such an integral part of the American Dream?
I’ve been really contemplating these questions for the past couple of months and would love to get your feedback. Here are some of my reoccurring thoughts on the issue:
The Original Need For Retirement
First, it would do a lot of good to get familiar with the original purpose of the modern concept of retirement. Our society’s fetish with retirement is still a relatively new concept. It wasn’t that many years ago that the New Deal spawned a series of ideas that would quickly mold our modern view of retirement.
You see, during those intense times it was becoming increasingly necessary for our government to find a way to encourage an aging generation to make room for the new horde of young, frisky, and most importantly, unemployed generation. It was a very tough time in our history and the public was demanding drastic action. The forces-that-be decided that the fastest way to implement the much debated Social Security Act was to have it paid from payroll taxes. In other words, the “retirement” of this generation would be paid for by the workers of the current generation.
Starting after the Second World War, our society started to push the concept of retirement even more and more. Suddenly, making it to 65 and retiring was our ultimate goal. Work diligently, pay your dues, and you’ll be able to retire with a little dignity. To be honest, this sort of system does have its benefits. If wages continue to increase, housing pricing continue to climb steadily, and population continues to explode, everything else just falls perfectly into place. For over 50 years, we’ve been able to hold the pieces of the puzzle firmly together. In more recent years though, the holes in the systems are starting to show.
Do We Still NEED Retirement?
Times have changed.
You no longer need strong back and able body to excel in the workplace. Being bigger, stronger, and faster only has advantages for a very small percentage of the population who are professional athletes. The evolution of both the computer and the internet have ushered in our current information age. The nature of business no longer favors someone just because they are young and more energetic. Business now rewards those who possess both the ability to rapidly obtain and interpret information, as well as the ability to comfortably adapt and evolve.
In addition, the life expectancy is no longer 63 years old, as it was when retirement age was set conveniently at 65. It risen over a decade and a half to just over 78 years!
It’s completely reasonable to work efficiently and effectively well past even 78 years old. The often cited and well-known story of Colonel Sanders was that he never even fried a chicken until age 40. Even then, the first KFC wasn’t franchised until he was 65. Whether you like Kentucky Fried Chicken (or Kentucky Grilled Chicken, whatever) or not, his story is a powerful testimony against retiring too early.
Sanders was one of a minority that went against the retirement curve of his time. Admittedly, part of his ingenuity came out necessity. Nevertheless, we can learn from his persistence towards seeing your passions through to fruition, regardless of age.
As the nature of our business continues to evolve and the expectancy of our lives continue to lengthen, it’s becoming more and more clear that our initial needs for “retirement” are becoming obsolete. But putting these tangible needs aside reveals an even bigger and more important question…
Should We Even WANT To Retire?
My biggest beef with our society’s current model of retirement is the underlying assumption that leisure is more fulfilling than work. After all, for over half a century we’ve been focused on working like slaves in order to be able to “retire” someday. This fiction concept of retirement was that all of our worries and problems would magically dissolve as we played shuffleboard, bridge, and met each other for Sunday brunches. Obviously, this is never the case.
Don’t get me wrong. Many retirees choose to spend more time with their growing families, start traveling, and even volunteer time to worthy causes and organizations. That’s all powerful stuff. However, all to often in reality we sacrifice family time, delay traveling, and ignore worthwhile pursuits upfront in order to pack them all together starting at age 65.
Do we really have to follow this sacrifice-and-cram mentality? Can we shift our “shoot for 65″ mentality to one that focus on aiming for lifelong fulfillment? In this day and age, we hardly have any remaining excuse for not initiating the alignment our passion, our work, and our purpose. These no longer have to be independently moving parts in our life.
If you are willing to buck social pressure and regain control over your financial life, you can unlock many more doors to following your passions. Instead of sacrificing the things we discussed above, Courtney and I have made the decision to sacrifice the nice car, the starter home, and constant debt payments. We’ve pledged to simplify our lives as much as possible in order to capitalized on the increased opportunities to truly follow our passions.
Is this the magic solution to happiness? I doubt it. But I certainly think it’s an upgrade from the outdated model we’ve come to know so well. Chances are your life and your circumstances are drastically different. Regardless, we both know everyone has the opportunity to spend time getting in touch with their true passions and purpose now. There is no reason to wait.
All things considered, here’s my challenge for you:
- Stop obsessing over retirement calculators, dreaming about life decades down the road.
- Start devoting that time/energy to becoming intimate with your passions and purpose.
- Stop viewing your working life as a separate and negative force that is only conquered by “retirement”.
- Start taking steps today that foster the alignment of your work, your passions, and your purpose.
Most importantly, I want to hear your opinions on retirement! Should it be the end goal for our generation? Even if not, is there anything really wrong with it? In what ways have you challenged yourself to break the mould of retirement? Please leave your opinions, comments, and criticsms below!
photo by Tiago
Adam - great assessment. Being one who believes in the mini-retirements brought to limelight from the 4HWW, I believe that life is meant to be lived in the present and not when you officially retire at 65 or whatever. With that said, I still feel there is a place for retirement savings. There are too many unforeseen circumstances that happen in life, from medical issues to natural disasters to family problems (divorce, etc) that having that safety to fall on is just necessary.
But…I think this is more of a lifelong savings style structure rather than a pure retirement account. It is true that people are working longer - I just helped launch a website for 55+ workers and there are way more job seekers than jobs for that market. People are not working in factories, but on computers and as Gen-X grows older they are going to be able to work from a desk till the day they die. Gen-Y may be working remotely on their cell phone that only God knows what can do till we are 70+.
It’s an interesting time and having a plan is just as important as living for the moment. Do I think I’ll have a traditional retirement, nah, but then who knows. Working an Internet Life now can turn into something else in 5-10-30 years. No matter where I am thought I am looking to the future.
Great post!
I think most people have the wrong view regarding retirement. People see retirement as “stop doing something” and many lose meaning and purpose in life. Instead of trying to “retire from” something, people should at least think about what they should “retire to”. That way they make sure that they are still doing what’s meaningful to them and what they are passionate about, without the burden of needing to work for survival.
Retirement should not be a goal. It should just be one of the options to make life more meaningful.
The idea of retirement has been ingrained into our minds as this thing that we have to work towards for the majority of our lives. We spend 30+ years working for something, that doesn’t sound all that great to begin with. I don’t want to just stop working altogether, and I would like to enjoy “retirement-esque activities” (travel in particular) throughout the duration of my life. Just because an archaic way of thinking in society says we should do something one way, doesn’t mean that is still the way it is. Thanks for the post!
Great post Adam!
As an entrepreneur, I don’t think I’ll ever want to formally “retire” until I just don’t have the physical ability to work anymore, and they have to drag me away from it. You watch a lot of the older generations, like my grandparents, sort of not know what to do with themselves when they do it that way, and I think folks who stay in business tend to stay sharper to a much older age.
I’m definitely not a proponent of the “deferred life plan” though either. I think it’s best to build a lifestyle like Tim Ferriss has where you can minimize the time you work on things you dislike in exchange for money, and increase the amount of time you spend on things you enjoy but may not bring income—blogging or writing for instance; travel; doing something creative; and giving back in some way you’re passionate about—all the other “legacy” projects you can spend your time on.
This statement is a mirror to my thoughts!
Over the past few decades people looked forward to retiring because many of them worked a job they hated their whole lives…
I want something different. I have long said that I will work until I die. I receive the strangest looks when I voice this oft-uncommon view, but what many do not understand is that I plan to turn my life passions into my life work. I am in the process of doing that now & I never want to stop!
Financial Freedom & Independence through Simple Living is my life goal. To live an impassioned life starting NOW, not starting when I’m 65!
Break the mold yo…
Hi Adam.
I couldn’t agree more. I wrote a post on my own blog a while back entitled “Don’t Retire.” I think a big part of the reason we’re so obsessed with the idea of retiring is simply that it’s been sold to us over and over for the last several decades by the financial services industry that’s sprung up around the concept.
Great post.
A quote for you “most Americans spend their health trying to build wealth, then spend their wealth trying to get back their health.” It doesn’t work.
I don’t understand the mentality of sacrificing everything for an uncertain future. Better to work at what you love every day than do a job you hate because you feel you have to. When life gets in the way (and it almost always does) you are left with nothing but regrets unless you have lived life each day to the fullest.
My work as a Wealth Coach and CFP® professional have demonstrated the power of aligning your financial choices with your values (the things in life that are most important to you). It is best if you can find the work for which (a) you are passionate, (b) you are naturally gifted and (c) others find of value. When you get all three … you will be wealthy beyond your imagination in every sense of the word.
I agree… in fact there’s not much to argue with:) I think Tim Ferriss put it best when he argued for taking “semi-retirements” throughout life - 2 months of work, 1 month off (or whatever you need).
I look at my own parents and think, why should one wait until the last quarter (or whatever) of their life to do what they really love? That’s what life should be about the whole way through. So just work towards trying to do as much of what you want to do earlier, as much as you can.
The hard part is the social stigma/reinforcement of not doing what your peers are doing, etc. seeming out of step financially or otherwise. No easy solutions to this, but hopefully the payoff is worth the friction following your own path can cause.
The current concept of “retirement” in our society makes me sad. I think you hit the nail on the head when you wrote about gaining control of your personal finances and minimizing your expenses and eliminating debt. That will allow you the freedom to do the things you really enjoy now, rather than trying to scrape a savings away for 50 years.
The Four Hour Workweek exposed me to a lot of these ideas for the first time, but it wasn’t until I read Dave Ramsey’s Total Money Makeover that it really clicked and I found a practical way to make these things concepts happen in my own life.
Retirement is more about financial independence than age or not working. If you like what you do, why would you stop? Simplify, get out of debt, and start saving, so you’ll be free to quit that job you hate so you can do what you want to do.
Hey Baker, this is fantastic article. It has obviously been born out of your recent dramatic life changes, including restructuring your finances and moving Down Under.
Given that an individual might not even make it to 65 in good health, it makes no sense to waste the majority of your younger years in a job you aren’t even passionate about. Societal pressures keep people thinking that the “deferred life plan” is the responsible thing to do. But you’re right, it is possible work less, live more and still save for “retirement.” You just have to prioritize what’s important to you, and jump out of the consumer-focused rat race.
Totally Agree! Especially the ending part. Start follow your passion and do things you like, then you never need to work one more day. You are enjoying your life in the current moment, that’s now!
I can’t imagine one day after I retire, I do nothing except travel. As long as I can move. I’d like to do something I am passionate about and bring value to others and this society!
When I retire, my work will shift to full time fiction writing (I hope). However, in the last several months, I have taken a first step in that direction. I now write a weekly fiction story for my web magazine, and am launching a free eBook for my subscribers on Friday - containing those stories + a big bonus story. I’m also attempting to get traction on a novel, and am adding writers to the mag’s staff in order to offload some of that work.
Travis McGee of the John MacDonald novels has the philosophy of taking his retirement a bit at a time - one year here, six months there.
I’m not sure how I feel about retirement. I’m finally going to be a Stay-at-Home-Mom. Dh calls it retirement. I call it practicing home economics. I tend to think that we would be homebodies in retirement, and we wouldn’t be downsizing any more (we kept it small to begin with). As a unit we would like to enjoy our community that we’ve built and hopefully not have to travel to our future grandchildren.
Adam,
I for one am not sold on the idea of retirement. By the time generation Y gets into their sixties, i wonder if the life expectancy will be late into one’s 90s, making those retirement funds increasingly valuable over the long run. I also view my funds as a legacy to be left on to family and loved ones (even if i am single right now… i know those things will be important to me in the future).
I think where people get into trouble is if they ONLY save for retirement. Yes, i am putting a lot away for it, but i am saving for other goals along the way, and achieving those goals is what life will really be about.
Great post!
Nice try.
I’m very sold on retirement and I’m in my mid 20’s working as a banking associate. Let me tell you, the financial “gurus” on The Street/MSNBC don’t know jack about the market and our out for commissions so they push the “retirement” scheme.
So why do I still give retirement a thumbs up? Well let’s it’s not call it retirement per se, but capital preservation and living off the dividends. I don’t need a variable annuity or sep-ira tied to negative yielding CD’s (inflation accounted) or even low cost “managed” fund. There are other alternatives if you turn the noise down on the new “it” retirement vehicle.
And yes, leisure > “fulfilling” work any day, no matter how you want to bend it. I’d rather be having sex than sitting at my cubicle but hey, bonus time is around the corner. I’ll be having sex every day when I retire at 35.
Great article! Good to see someone living with purpose and passion with the family instead of sacrificing them for a mythical time later that will never come because of the relationships broken along the way.
This is a great concept, as long as anyone who follows it realizes they need to cover the basics like health insurance (for catastrophes), life insurance (in case you die early in life while people depend on you), and enough to cover your expenses in case you can’t work at all.
I don’t want to sacrifice living today for a retirement, but my idea of not sacrificing is to stay at home with my kids for the last 11 years, and for 4-5 more. I’m sacrificing earning now to raise them in the present. As they get older I can focus on working more, and saving more, and hopefully create a lifestyle that is based on working from home (or anywhere we want to be) while doing something I love.
I completely agree with your concept Adam and I would go even further than that. The life expectancy of 78 you gave I think is an average for the US but to give you a more precise example, Japanese women have already broken the 85-year-old average and French women will do so in 2014. American will have to wait much more, until around 2150. As for men, the French will reach it in 2052, Japanese in 2060 and Americans around 2200. Surprised? What you eat and your healthcare system are at work here
So, as life expectancy slowly rises, mini-retirements are the obvious answer.
Even better, it is estimated that within 20-25 years a cure (stem cells, telomerase, gene therapy, etc) will alter significantly our longevity allowing us to reach easily 150 years or more. Think about it. ‘20 years’ is nothing. Imagine soon living until 150 with all your senses and energy. It will be the golden age of mini-retirements! A long life of leisure and meaningful work will be interspersed repeatedly.
Better start practicing mini-retirements now! (Eat healthy and exercise too)
As a fellow 25-year-old, this is an issue that I’m really starting to wrestle with. For me, I really want to go traveling and see the world, and I’m working on making that happen before I turn 30. 65+ is way too long to wait to do some serious traveling, and I just don’t know what the future holds 40+ years down the road. I don’t want to work 40+ years only to find that I’m not healthy enough to go hiking or scuba diving or whatever crazy adventure that I want to do next.
the brilliant fact your post really left for me is that the world is completely changed. it reminds me of how i explain to people that task lists don’t really cut it anymore. we simply don’t have the same tasks as we did 50 years ago, we have to shift our minds around the current state of the world.
if it wasn’t apparent, i completely agree that retirement shouldn’t be the end goal anymore. should we save for the future? yes absolutely, but it should not be the end goal. if you define work as anything you want to do less of, then we should be pushing ourselves to follow our passions and free up our lives to enjoy them consistently throughout our life. some can do that with their 9-5, a lot cant and i believe those should pursue to break free…i couldn’t help but to be brought back to chapters in the 4 hour work week on getting over fears and putting dreams on a timeline when reading your post. great reflections.
the key was in one of your last paragraphs…
“Start taking steps today that foster the alignment of your work, your passions, and your purpose.”
…. now hmm lets see where can i find those “steps” …thanks!