Retirement As We Know It: A Recent Phenomena, Not An Entitlement

It might be hard to imagine, but retirement as we now expect it (retire in your 60s and not work for the rest of your life) has only been around since the 1950s.

Prior to that there were a couple of things that factored into retirement not existing for most:

1) People didn’t live into their 80s or 90s, especially men. ¬†They died well before that.

2) Retirement plans didn’t become broadly available until after WW2, when employers began offering defined benefit plans (commonly known as pension plans) to distinguish them from competitors and attract workers.

The convergence of employer-funded retirement plans and people, most significantly men, living longer, led to the retirement culture witnessed in the latter part of the 20th century.

Will you be able to have it as an option for yourself, even if you currently don’t think you want it?

It’s an incredibly important question to know the answer to.

You can’t wholly immunize yourself and your financial plan from unknown future events.

Yet you do have, within your control, the most important variables that determine your ability to retire:

1) The amount you save

2) The amount you spend

Asset allocation, diversification, strategic and tactical decisions, are far less important than your ability to excel at the above 2 items.

This isn’t meant as an either/or statement.

It’s meant to reinforce that your behavior with money is far more critical to your financial future than any asset class in your asset mix.

(Full Disclosure: I am a Fee-Only Financial Planner. My website is here.)