Retirement Tips

Retirement Investing - Just What Is Retirement?

October 24th, 2006 by Papabear

We’ve spent some time on this blog talking about retirement investing, but have you every stopped to think about just what is retirement? Where did this idea come from that we should stop working while we’re still able to work?

Back in 1850, when the average life expectancy was just 38 years, there really was no such thing as retirement as we know it now. The rich could continue to get an income from their investments as long as they lived. Everyone else, mostly still living on farms, worked as long as they were physically able. Quite often the illness that stopped a person from being able to work was the illness that would also kill them.

Even by 1900, when many people had moved into town and had gotten factory or service jobs, most folks still worked as long as they were physically able. If what stopped you from working did not kill you, you moved in with you children, if you weren’t living in a multi-generation household already. The retirement program then for almost everyone was for your children to take care of you in your old age. This usually was the only arrangement needed since life expectancy was still only about Age 50.

The idea of retirement as a lifestyle after working evolved along with Social Security. But even when Social Security began in 1935, average life expectancy was still just Age 63. Since most folks did not live past Age 65, it didn’t take too much money to fund Social Security payments to those who lived to Age 65 to begin collecting benefits. There weren’t that many of them for those who were still paying into the fund.

Now people are living longer, and politicians and pundits talk about the Social Security funding gap. Maybe, just for a moment, we can see the bright side of this. If most of us were still only going to live to Age 63 to 65, there wouldn’t be much of a Social Security “crisis” because there wouldn’t be that many folks living longer to collect money past Age 65.

So…let’s resolve to be happy, just for today at least, that we have the luxury to need to think about retirement investing. If we were just going to work on and on until we suffered some fatal illness, we wouldn’t need a retirement plan. But we are living longer and healthier lives, and that’s a good thing.

Here’s a thought on retirement investing and retirement planning that has stood the test of time, written by the wisest man who ever lived:

“Go to the ant, O sluggard, observe her ways and be wise, which, having no chief, officer, or ruler, prepares her food in the summer and gathers her provisions in the harvest season.”