- The Lindy Newsletter
- Is Retirement a Fading Mirage?
Is Retirement a Fading Mirage?
U.S. Senator Dianne Feinstein, a Democrat from California who was first elected in 1992, passed away recently at the age of 90. She died while working. On the day of her passing, she voted in Congress in the morning and died later that afternoon.
Feinstein, the oldest sitting member of Congress, had nevertheless continued to serve, even voting on a spending bill on Thursday morning hours before her death. She missed two subsequent votes on Thursday afternoon.
— The Daily Beast (@thedailybeast)
Sep 29, 2023
She kept working up until the last day of her life. But she didn’t need to keep working. Her net worth was in the hundreds of millions of dollars, courtesy of her late husband, Richard Blum. He had sculpted an empire out of the world of private equity with Blum Capital back in the 1970s. By the time she was elected, the Blum name was already very wealthy.
Feinstein held a position of significant influence, far from the typical office cubicles where many Americans work. Her office was a hub of activity and power. Assistants surrounded her, ready to act on her every directive. She wasn't constrained by a traditional work schedule; she had the freedom to choose her engagements. The responsibility and respect that came with her role were significant, with many hanging onto her every word. Sounds like a lot of fun and also intellectually stimulating.
For most people, work isn't about power or influence but a constant routine. Instead of dreaming of authority, many yearn for a break from their obligations. They look forward to retirement, a time to relish life without duty's burdens, and to enjoy the freedom that comes with owning their time, even if just for a few years.
Retirement is what we call this stage of life.
Retirement an End Goal
Our life journey has always been marked by clear milestones: elementary school, middle school, high school, and university. These phases have set beginnings and endings, which makes the challenges within them feel temporary and surmountable. However, once you step into the realm of full-time employment, it can feel like a never-ending chapter with no foreseeable conclusion. We're conditioned to see retirement as this concluding chapter. Retirement is often assumed to be a guaranteed stage in life, isn't it? Many can't envision a life without a retirement phase because it's what society has instilled in us.
But what if retirement is just a 20th century phenomenon like other things like moving out of the house at 18?
Nearly half of Americans age 18 to 29 are living with their parents.
— Steve Stewart-Williams (@SteveStuWill)
Oct 5, 2023
Retirement and Anxiety
I don’t think retirement anxiety hits until you are in your late 30s or 40s. In your twenties, the focus is firmly on forging a career path. The thirties shift attention to deepening romantic ties and nurturing a growing family. But as the late thirties and forties roll around, and subtle signs of aging appear in the mirror, thoughts inevitably drift towards the later years and what retirement might hold. Are you going to be an old man working a job you do not want to work at because you don’t have enough money to quit?
We all have a voice that keeps asking, “Have I done enough?” And the growing dread is that maybe, you haven’t. The idea of being a burden on my children or relying on social welfare is not the legacy you had envisioned. You want to be able to enjoy my later years, not dread them. But the clock is ticking, and the fear is real. Every decision now feels weighted by the question – will this choice bring you closer to a secure retirement, or push you further into the abyss of uncertainty?
Why Could Retirement Fade Away?
Economic, societal, and demographic shifts have fueled growing concerns about the future of retirement. We’re already seeing battles in France over retirement.
Macron had the courage to stick to the measure.
It's simply an actuarial problem. If people live longer the ratio of retirement to employment lengthens so citizens need to either contribute more and more or maintain the ratio. No escape.
— Nassim Nicholas Taleb (@nntaleb)
Mar 21, 2023
At 62 years of age and still working your life expectancy is 85-91. People are living longer lives and our retirement system isn’t made for that. It was designed originally for only a few years before death. During the 1930s when Social Security was established, the majority of Americans did not expect to live past 65 when potential benefits kicked in. But, who wants to keep working until 80? Not you or me.
Here is why I am worried about the future of retirement.
Social Security Shortfalls: The U.S. Social Security trust fund is projected to be depleted by 2034, with only 76% of promised benefits payable after this date. This is largely due to the ratio of workers to beneficiaries decreasing. In 1950, there were 16.5 workers for every Social Security beneficiary. By 2019, that ratio had dropped to 2.8 to 1.
Pensions: Defined benefit plans, once the retirement standard, have been on a decline. According to the U.S. Department of Labor, the percentage of private-sector workers with a traditional pension plan fell from 38% in 1980 to under 15% by 2020. companies increasingly favoring defined-contribution plans over the more secure defined-benefit plans. This shift places the investment risk squarely on employees' shoulders
Life Expectancy: The average life expectancy in the U.S. rose from 68 years in 1950 to nearly 79 years in 2019. This increase means retirement funds need to last longer.
Healthcare Costs: A study from Fidelity estimated that a couple retiring in 2022 would need approximately $300,000 for medical expenses alone in retirement. This figure has been trending upward annually.
Savings Deficit: The median retirement savings for families in the U.S. between 56 and 61 years old was $21,000 in 2016, according to the Economic Policy Institute. This is far from what's required to maintain one's standard of living in retirement.
The broader statistics already show some worrying signs: 40% of retirees rely solely on social security, with 62% expecting to work post-retirement.
Given these figures, there's concerns about the sustainability and accessibility of traditional retirement going forward.
In This Newsletter
If retirement as we know it disappears, individuals and society will need to adapt in various ways to cope with aging in the modern world.
1) Our New Post-Retirement Future In a world where traditional retirement might not be feasible or may evolve due to societal and economic shifts, several potential scenarios could shape the lives of older people. We will see novel ways of living for the elderly and strange social relationships. Perhaps, this will be you.
2) The World Before Retirement What did people do before retirement? How did they get old? Who supported them?
3)Today is the Golden Age of Retirement: Many financial analysts, sociologists, and economists refer to the present era — roughly the period from the late 20th century to now — as the "golden age of retirement" for several reasons. Let’s go through them.
Our Post-Retirement Future
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