What Could The End Of Retirement Mean?

By Mochi and Macarons | February 13, 2013 AAA

Recently, Fox Business ran a video about rethinking retirement, titled "Is Retirement a Thing of the Past?" The video states that "nearly two-thirds of Americans aged 45-60 plan to put off their retirement."

Most people are uncertain that Social Security will still be around to take care of them in five to 20 years. They also are saving only about 4% on average, and most Americans don't have a solid amount set aside in their 401(k) retirement accounts, either. What would it mean for Americans if retirement were to become the thing of the past?

The History of Retirement
Before we can discuss this possibility, we have to understand how the concept of retirement found its place in America about 78 years ago.

In 1883, Chancellor Otto Von Bismarck of Germany said that he would "pay a pension to any nonworking German over the age of 65." This promise was a novel but rather sly one at the time, as people didn't typically live long enough to be able to collect on it.

The idea of retirement wasn't adopted in the United States until 1935. Older workers couldn't afford to retire, but the younger ones desperately needed to feed their families (and they were more productive to boot). Americans realized that older workers were not going to give up their secure jobs and put themselves out of work during the Great Depression just to let the younger workers take their places.

As a result, President Franklin D. Roosevelt proposed the Social Security Act of 1935, which made workers give the federal government a part of their paychecks each month towards Social Security, which would then be redistributed to them at retirement.

Retirement Today
Americans are now facing the exact same problem that their predecessors faced during the Great Depression. Older workers are delaying retirement because they are unable to survive on just Social Security and their meager 401(k) savings. On top of their lack of savings, the cost of living has increased.

If retirement disappeared, Americans would have to work until the day that they died, just as life was 78 years ago. Then, the only people with an ad hoc retirement plan were farmers. If they had many children (hopefully boys) and were able to raise them to adulthood, the children could eventually take over the family farm to continue to provide food for the family. Children were, in essence, their parents' retirement plan.

However, as we've moved away from an agricultural-based society to a high-technology one, it is not quite as viable of a plan to have lots of children and hope for them to be able to pay for everything.

Americans today may end up working in an office until the day that they die. Many different expenses and trends that keep Americans from retiring. Many Americans are now living to the average age of 78, which means they will need to pay for at least 13 years of retirement.

Americans today also currently have a share in the national debt. It totals approximately $16.483 trillion dollars, or $52,432.25 per U.S. taxpayer. This money will eventually need to be repaid.

The Bottom Line
Retirement isn't a universal, basic human right that is afforded to everyone - it is a privilege. If you haven't saved enough, you simply can't retire, and you will have to work until the day you die.

The CEO of Euro Pacific Capital, Peter Schiff, said in the Fox Business video that Americans now have to learn to produce more than before while saving more, borrowing less and consuming less.

If we don't, the end of retirement could be nearer than we think.

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