Forex Articles

The concept of retirement has changed a lot over the past century. In fact, current American retirees likely had no idea that their golden years would turn out this way. From a work-until-you-die existence to today's view that everyone over 65 should live a life of leisure, retirement is an ever-evolving concept that needs to be constantly re-eexamined. By exploring alternate definitions of retirement, we can change the way we currently think of it – work hard for 40 years, then have a relaxing life – to one that is more equitable and easier to accomplish for all Americans.

When you hear about retirement from yesteryear, you invariably think of the story of your grandfather who worked 40 years at the same factory before collecting his secure pension and lifetime of health insurance at age 65. However, that concept of retirement is a recent development. The first retirement plans were implemented in Germany in 1889; before that, unless you had family to care for you, you worked until you died.

This makes sense. Life expectancy for Americans in 1900 was 47.3 years, so the economics behind state pensions didn't really harm anyone; every worker paid taxes for a few decades and some got to take a little bit back if they lived long enough to retire.

President Franklin D. Roosevelt introduced Social Security in 1935 using much the same reasoning. But the U.S. became wildly more prosperous than Roosevelt could have imagined, and everyone's life expectancy and standard of living soared. After a while, Social Security stopped reflecting economic reality.

Modern retirement is quite different. Currently, people believe you work until 65, 60 or even 55, collect your pension, and then raid your savings, home equity and 401(k) to pursue a life of leisure and volunteer work. Traveling is a popular activity, and a whole seniors' travel industry has grown out of demand by this demographic.(For more, see Most Senior-Friendly Cruise Destinations.)

Today, the vast majority of people will make it to 65 years-old and will live for 10, 15 or 20 more years, hoping that the state and their savings will take care of them. The realization that this system is unsustainable is there, but it would take mountains to change policy. No one wants to increase taxes, and no one wants to increase the age of eligibility despite the fact that retirement is meant to be the stage of your life when you can't physically work, not a period after an arbitrary age.

The modern application of retirement has created unrealistic expectations of what retirement should be. Instead of pursuing a life of purpose and relying on the state to care for us when we're infirm or unable to work, we are living a life to save as much as we can now in order to pursue a life of leisure later. It's not fair to say that people should be working until they die – that's a bit too cruel – but rather, we should begin changing the definition of retirement.

Life is about more than working hard. Instead of choosing career paths that lead towards traditional 9-to-5 jobs, some people are beginning to see the appeal of living in a permanent state of semi-retirement.

By embracing minimalism and being frugal, it's completely possible to survive in an area with a low cost of living by working part-time. While minimum wage work at the local restaurant might not pay the bills, people who are a few years into their career when they take the semi-retired plunge can readily find decent paying part-time work. Picture an accountant who only works six months of the year or an English tutor in South America who works three hours a day.

One obvious downside to this approach is societal expectations: it can be difficult to explain to others that you work part-time by choice because you value being permanently semi-retired over making money.

Another subsection of the population takes a mini-retirement, which is essentially a break from working however old you are. Mini-retirement is logistically more difficult than semi-retirement but it's closer to the life of leisure description of retirement we heard while growing up. Mini-retirements are long breaks from the workplace, during which a person spends his savings and does whatever he wants with his free time.

The major benefit of a mini-retirement is that a person who takes a two-year break from work at 35 has the luxury of being able to reintegrate into the working world. Someone who retires at 65 and realizes that he needs to return to work at 72 would have a much, much harder time finding a job. (For more, see Rejuvenating Your Life And Career With A Sabbatical.)

Health-wise, mini-retirements allow for more adventurous and inexpensive travel. A 20-something backpacking around Europe on his first mini-retirement can spend a fraction of what a traditionally-retired 66 year old will during a similar trip.

Being the hands-off owner of a successful business is a great way to retire without waiting until you're 65. There are two ways to fund retirement through entrepreneurial pursuits.

First, there's the idea of having a passive income business. Popularized by books like The $100 Startup and The 4-Hour Workweek, creating a passive income stream is part hard-work and part luck. However, if done successfully, it can allow for a lifestyle that supports what we consider a retirement lifestyle without any of the downsides like ill-health and the potential for poverty. Passive income isn't for everyone, though; the major downside to living off of passive income is that you'll need to find something to occupy your days, and, as modern retirees can tell you, having nothing to do all day gets really boring, really fast.

The second option is through an active business. Building up an active business, like a restaurant or other small business, lets you have the freedom of retirement along with the satisfaction that comes from being your own boss – after you've put in years of hard work without vacations to get the business going. While finding the right idea to pursue or the right business to buy is tricky, being a small business owner could be the key to redefining what retirement means. (For more, see Starting A Small Business.)

Retirement communities barely existed 100 years ago. Today, retirement is defined as older people leading active lives, volunteering, socializing and otherwise keeping busy during the years between when they begin collecting Social Security and death.

Society will have no choice but to change over the next 100 years. We can no longer support people who wish to have a leisurely retirement, nor should we want to. Retirement itself needs to be redefined and accessible to everyone, not only those who can afford it and have reached a certain age. By pursuing alternative retirements, more people will be able to benefit from the leisurely aspects of retirement, without needing to save for 40 years and possibly becoming too infirm in the interim to enjoy it.