Dan Dobry
Dan Dobry

Is Retirement a Dying Concept?

Babies born today will probably live on average 105 years. If they are to enjoy the great opportunity of a long life, they must, it seems abandon the outdated notions of the traditional stages in our lives. 

As a child, it was made clear to us that there are three stages in Life, the first stage is learning, the second is working and the third is retirement. Some of us forecasted that we would retire early with enough time to enjoy what life has to offer (based on the assumption that you cannot really enjoy the “working” stage). 

Moving into the 21st century along with the reality that “longevity” is here to stay, we need to rethink this whole concept. 

Back in 1889, the German Chancellor Otto von Bismarck invented the idea of retirement, establishing the concept for the rest of us. “Those who are disabled from work by age, have a well-grounded claim to receive care from the state,” he said at the time. He wanted to address high youth unemployment by paying those 65 and older to leave the workforce, and other countries followed suit with the same retirement ages.

But Bismarck’s world was very different from today. The average life span was 45 and only 35% of people born reached the age of 65. If you managed to get to the age of 65 then you had an average additional life span of 8 years. 

Today the average life span of those dying today in the world is close to 80, 98% of all children who were born 65 years ago will arrive at age 65 and when they get there, they will have an additional life span of 25 years. 

But these numbers are relevant for those who were born 80 years ago. If you were born today, you could expect a life span of 105 years, 99% of all children born will live to the traditional retirement age of 65 and when they get there, they will live on average an additional 45 to 50 years. 

If we continue to think like Bismarck and plan to retire at 65 or earlier the question is “Is this realistic?” 

The issue of longevity brings up much more questions than just when to retire? 

In the social model where our education is put in place at the beginning of our lives, what can we learn that will be relevant for the next 60 years of our lives considering a backdrop of technical and industrial transformation. 

Statistics tell us that in addition to accumulating assets over our lives for us to even consider an option of retiring we will need an additional $ 400,000 just to cover health care costs. (Which means we need to accumulate income creating assets that will allow us to live aligned with the lifestyle we have built plus an additional $ 400,000).  

Then add on the social factor, while an unbroken, extended working life may solve the financial challenge, it will inevitability deplete other important assets of life, such as health and friendships and retirement itself increases the risk of depression by 40%.

For many of us, it’s starting to feel like the light at the end of the tunnel of life has been blocked. 

So, is retirement on its way out of history? 

To get to the root of the issue, let’s look at the sandy islands of Okinawa, in the East China Sea. Men and women in Okinawa live an average of seven years longer than in the western world and have one of the longest disability-free life expectancies in the world.

But they also have an outlook on life that is very different from those in the West. While we think of retirement as the golden age of traveling abroad, playing golf or bridge, and enjoying life, guess what they call retirement in Okinawa?

They don’t. They don’t even have a word for it. Literally, nothing in their language describes the concept of stopping working. Instead, one of the healthiest societies in the world has the word ikigai (pronounced like “icky guy”), which roughly translates to “the reason you wake up in the morning.” 

So, what will replace retirement in the west? 

The evolution of culture is difficult to predict, but if I had to guess, then I would forecast a multistage life. A world where we will focus on one hand on accumulating income creating assets, and on the other a better work-life balance. A life where we will need to reinvent ourselves every so often, and a world where we will be in the constant pursuit of knowledge as we develop and change. 

Sometimes the changes in our lives will be driven by choice and sometimes by reality. 

Longevity has been a slow process but now has reached a level that requires a fundamental redefinition of the social and financial institutions that support it. 

We can each look forward and do our best to prepare ourselves and our families for these longer lives. Working with a professional who places understanding family challenges as his priority is a must. We must plan out our lives and leave as little as possible to chance.  

I think that the political and policy debate on this issue will have an unbelievable impact on all our lives, and it is only just beginning.

About the Author
Dan Dobry was the founder of the Union of Financial Planners in Israel (UFPI), served as the first Chairman and President of UFPI. Dan was the Global Council Representative for Israel for the Global Community (FPSB) from 2012 - 2018 and from January 2019 is a member of the Committee for Standards and Qualifications for the European Union (SQC).
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