Retirement was not invented for old people

The moment you're born, you start getting ready to retire. This is the key. You get a social security number and you start hearing the tales. Have you noticed how more and more people are taking to the outdoor way of life? You're sold this dream of ultimate freedom and relaxation, maybe on the beach. They'd spend hours figuring the fun they'd have on their retirement. And all it takes is getting old. Retirement is sold as this happy end to a life well lived. But is it really? For millennia, humans worked until they died. And then they didn't. This is a story of how the world was convinced to stop working and why some people are changing their mind. I got an email the other day with this old couple smiling at their unbranded tablet. It was for retirement planning. And I didn't realize I was in this demographic. Researching retirement for the last month probably didn't help. But it's also not like this is the first time I've heard about retirement. For example, in my home state of Ohio, every high school student has to take a personal finance class, which includes a section about your retirement. Then the minute you start working, they tell you start saving. Like a Walmart cashier gets a 401k. And this weird AI woman from the uncanny valley can help you set that up. You can receive up to a 6% match on your contribution. Then there's the whole industry of people helping you figure out how to retire. Are you wondering how to prepare for retirement? Retirement. And then the glorious world of retirement itself. Hop on a retirement cruise. Or join the 81,000 other people living out their final years golfing, swimming and sipping martinis at the world's largest retirement community in Florida. In the US, there's $36 trillion of assets in the retirement savings industry, which brings in $937 billion of revenue a year. And then there's the retirement communities, which made $82 billion in 2022 and employ almost 900,000 people. Not to mention vacation packages and golf courses and timeshares. Retirement is a huge industry. But just beneath the surface, it's cracking. From 1991 to 2016, there was a 200% rise in old people filing for bankruptcy. All the while, Social Security is running out of money. And 90% of low-income workers about to retire don't have a single penny saved. Retirement is so ingrained in our everyday life that most people just never question it. But what if I told you the whole thing was just made up? Welcome to the Worker Simulator. The year is 200,000 BC, and the average life expectancy is 33 years. This human, living in what's now the US, is 20 years old. So they have roughly 10 more years until retirement. And by retirement, I mean death. But for the last 200 years, humans pretty much worked until they died. And that was because work was simply the act of survival. In 1880, just 3.4% of Americans are 65 or older. And 78% of men in that age group are still working. But across the world, in Germany, something else is happening. This is our Arbeiter. He's young, healthy, and ready to work. But nobody will hire him. So there's this political party that comes around to him and says, we're a bunch of workers who just want better conditions. We'll fight for you. It's the Socialist Party. He's like, all right, that sounds great. But the Chancellor of Germany, Otto von Bismarck, has other plans. He hates the Socialists. They're gaining power and are so threatening that he passes an anti-Socialist law. But it doesn't really work. The workers still need jobs. So Otto gets crafty. He needs to figure out a way to get these young people employed so that the Socialist Party, with all of its radical programs, won't be so attractive. He could make more jobs, but that's hard. So what if he just gets older people to stop working? But how? Well, pay them with the wages of new young workers. People are like, dude, this is socialism. But Otto is just like, no. So in 1881, Otto von Bismarck invents retirement as we know it. If you're 70 years old, you can stop working and the government will pay you. Back in America, though, we're not quite there yet. But our worker is getting old and slowing down a bit. Maybe you should get out of here. Men aren't useful after 60. In the heat of the Industrial Revolution, factories are trying to maximize profits. But old workers are slowing them down. A few companies give pensions, but a lot of other ones just kick out old people once they're no longer helpful. So jobless and old, these people end up really poor. And then the Great Depression hits. Without jobs, we had no money. And without money, we could not purchase food for the hungry mouths at home. Our only hope lay in charity. Unemployment has never been higher and millions of young Americans don't have a job. And the old people with jobs are holding on to them. So this doctor who's old and poor comes up with a solution. Let's make a general tax and pay old people with all the revenue. $200 a month, which is almost $5,000 in today's money. That's a lot. Maybe a bit socialist? So the US, 50 years later, has the same problem as Germany. And they have the same solution too. This social security measure gives at least some protection to 30 millions of our citizens. In 1935, FDR signs the Social Security Act, which takes 1% of the first $3,000 workers make and gives it to people 65 or older based on how much they worked and put in. It's way less than that $200 a month plan, but it's still enough to coax old workers out of their jobs. And this guy takes the first ever payment of 17 cents, which was so low because he retired one day after they started collecting the tax and only ever paid in the nickel. The typical person, though, got about $22 a month or $500 today. So now our guy has a new option on his menu, retire. From 1880 to 2000, the percentage of men over 65 still working goes from 78% to 17.5%. Everyone's retiring. At the same time, people start living longer than ever before, leading to an influx of old people. Today, 17% of Americans are over 65, and almost all of them are getting social security. But there's a problem. Despite being sold as a system that you pay into, social security never actually saved for the old people. The entire program is reliant on a continuous batch of young workers to keep it going. Maybe ever so slightly Ponzi scheme-ish? And there aren't enough workers. In 1940, there were 42 workers per retiree who was getting money from social security. But now there are three. Also, despite being an old system now, people are kind of bad at retiring. They don't save enough money, and basically all of the brunt is on individual workers rather than the companies. For example, for years, United Airlines sponsored a pension for its retired workers, until it went bankrupt. Now, if you look at the benefits for a pilot, you just get a 401k, which requires you to pay in yourself. This is why some people are never able to contribute anything. What did you think you'd be doing at 66? Oh, I would hope to be retired. And what are you doing at 66? I'm working my butt off. For millions of Americans, having enough money and savings is one of the biggest challenges, especially when you consider recent Wall Street losses that are shrinking 401k plans. Also, retirement's just weird. People work all of their lives, and stopping that at some arbitrary age is tough. What are you supposed to do? In this video on retirement, loneliness. I hate it. I hate not having a purpose. If you look through this Facebook group of retired people, you'll see they aren't all living the dream they were sold. In a very interesting reversal, in the last 20 years, old people have started going back to work. By 2032, the Bureau of Labor Statistics predicts 30% of Americans 65 to 74 will be working, a 50% increase from 2000. Americans have had 90 years to try in retirement, and for some of them, it just doesn't fit. It's almost like retirement was artificially created to avoid socialism and get jobs for workers and not for the fulfillment of old people. And people are realizing that. A lot of people don't want a break. They just want purpose. And with all of the savings some old people have, retirement is the perfect opportunity to freely figure out what does that for them. And for some people, that's just going back to work. And squeeze all the juice out of retirement. You probably woke up to read Morning Brew.