I spend a lot of time speaking to people either approaching or in retirement.
In its simplest form, we build financial dashboards and map them to desired lifestyle goals using a toolbox of local and offshore investment vehicles. This allows us to show individuals exactly what their options are and what is possible ie do I have enough money, how to pay less tax, do I need to work longer or can I retire early, how do I effectively structure my estate for passing on wealth to my children.
Retirement planning is difficult for a number of reasons.
It’s interesting that when I discuss retirement, there’s generally a shared understanding of the concept.
I’ve been reading up on the history of retirement in America and not surprisingly, retirement is a relatively new concept. It’s only been around for a couple of generations.
100 years ago, retirement simply meant you were about to kick the bucket (for 95% of the population, anyway).
Have a look at the below chart on the labour force participation rate for men going back to 1850:

Other data points of interest that I found:
- In 1940, only 3% of those who retired did so because they could afford it. The remaining 97% retired for health reasons and consequently relied on their children or relatives for support.
- By 1963, however, 17% of people who retired could afford it, and by 1982, this number rose to 48%.
- During the early 1900s, 40% of elderly individuals in the United States depended on their children for financial. This percentage decreased to 22% by 1940, and further to 5% by 1990
- In 1910, less than 30% of wage earners reported taking vacations (and these weren’t paid vacations). Vacation in itself was a luxury reserved for only the top fraction of society
- In 1880, a 20 year old could expect to spend an average of just 2.3 years of ‘retirement’ ie not working. Today, we ‘retire’ at 65 and expect to live another 20 to 25 years. That’s almost another third of a lifetime just for ‘retirement’.
We may be concerned that we have slightly less than we would like or may have to work slightly longer than anticipated. But looking back at our history, old age has typically been a pretty bleak picture.
I’d much rather be approaching 65 today than in 1950 or 1850. Not just because I’d likely be dead by now, but because the social and economic structures we’ve have built over the past two centuries allow us a much better life in old age (and a better life in general today).
There’s still a lot wrong with the world, but looking back, humanity has come a long way and I think that sometimes we forget this. This is a positive story that we should always be aware of.