Relative to history, retirement is quite a modern ‘invention’. Just looking at the average life expectancy and you can see why.
Prior to the 1800’s life expectancy was less than 40 years. By the 1900’s the number had increased to late 40’s. In other words, it took a long time to get 50, and since then increases in life expectancy have been rapid.
Prior to 1900, with an average life expectancy so low by today’s standards, it is easy to see why retirement was not much of a thing. Living to 40 or so meant a life of work with no need for retirement. Of course there were exceptions to the averages who lived to their 60’s or 70’s but they were few and far between. Growing in numbers by the 1900’s.
This growth in numbers of older citizens, coincided with the introduction of retirement in the late 1800’s and early 1900’s, dependent on which part of the world you were in. Governments starting introducing payments for the elderly in what is now known as Superannuation. 60 was the starting age for most governments.
For the few that made it to retirement age, most didn’t live for much longer. As would be expected with an average life expectancy of late 40’s.
Now we have average life expectancy that has almost doubled in the last 130 years. In NZ women live to mid 80’s and men early 80’s. Yet the retirement age from a Superannuation perspective, has only increased by 5 years. Currently at age 65.
Many people see 65 as the automatic age of retirement. Super payments start and work stops is the thought pattern of many.
But is that working?
Everything is getting pushed back except our retirement date. We are buying houses later. We are getting married later. We are having kids later.
The average age of first home buyers 25 in the 1970’s to around age 37 now.
The average age of marriage 22 in 1970 and around 30 now.
The average home ownership rate was 68% in 1970, and around 64% now.
With house prices so unaffordable, people buying houses later in life, people combining incomes later in life, and people living longer, retiring from work at age 65 is becoming more and more of a challenge.
NZ currently has one of the oldest workforces in the world. One third of New Zealand’s workforce is over the age of 55. 24% over the age of 65 are still working and 44% (almost half) of 65-69 year olds still have jobs.
Around half of those working past the age of 65 doing so out of necessity. For the income.
These numbers have nearly tripled from as little as three years ago.
With average age of first home buyers and marriage older than it has ever been, and life expectancy greater than it has ever been, I don’t see any easing with regards to the requirement for over 65’s to work for financial reasons.
All this is to say that I don’t think that we should look at retirement as the holy grail anymore. It may have worked in the past when life expectancy was less and mortgages were paid off sooner. But that is not the case now.
65 though is still young. As a society we have a lot more jobs now that don’t require a lot of manual work. This is good for the general older person who isn’t a labourer. Because health is critical in our ability to earn an income.
I still tend to use 65 as a point of retirement for my clients for planning purposes. But that is more for conservative planning purposes than anything else. Working past the age of 65 is going to become more and more common.
What implications can this have for you?
Basically, working longer than your ancestors. Not because you necessarily want to, but because you have to.
So be kind on yourself and on your body.
Knowing that you may be working for so long, enjoy some breaks along the way. Maybe a vacation, or a sabbatical. Perhaps even part time work well before retirement or Coast FIRE. Find work that you find enjoyable even if it means lower pay. All these options will help the journey be more enjoyable and extend your working life.
Don’t work so hard that you don’t take care of your body. I have bashed my body through lazy techniques and lack of stretching, as well as regular alcohol consumption for many years. I will more than likely pay for that later, so I have to plan for not having the ability to work in old age. If you can keep your body healthy, you can work well into your 70’s or later if you need or want to.
Retirement, or at least age 65, will not be the holy grail it once was. That is already happening.
So don’t treat age 65 as an automatic point to finish work. For a third of 65+ year olds, working past the age of 65 in the future will be a financial necessity. The statistics are grim and the situation is only getting worse.
If you need help with your personal retirement planning, then get in touch today.
The information contained on this site is the opinion of the individual author(s) based on their personal opinions, observation, research, and years of experience. The information offered by this website is general education only and is not meant to be taken as individualised financial advice, legal advice, tax advice, or any other kind of advice. You can read more of my disclaimer here