By Marion Humphries
Special to the Financial Independence Hub
Let’s start by defining the word retirement. A quick online search reveals that the literal meaning of the word retirement is: to withdraw, retreat; the time at which one withdraws from the workforce.
By definition, the act of retiring has a very passive connotation. No wonder there is apprehension by some to enter into this phase of life. The word Retirement suggests inactivity, slowing down, isolation, loneliness, and withdrawal from society.
Perhaps we can gain a better understanding of why such a negative spin was placed on retirement by briefly examining its history. The concept of retirement was introduced in North America a little over 100 years ago when the industrial revolution was taking place.
It was thought that elderly workers would slow down production. Job opportunities were limited, and older workers were preventing younger workers, with families to support, from much needed employment. Paying elderly workers to stop working seemed like a good idea. Initially, the US government paid the matured workers to step aside and withdraw from the labour force.
Social Security, 1935
Eventually, in the United States, the Social Security Act was introduced in 1935, whereby workers would pay into the program throughout their employment and eventually fund their own retirement.
Fast forward to today and we see similar social programs still exist for the aging worker, but there have been many modifications to how these retired folks would be compensated. Canada took the lead from other developed countries and in 1927 the Old Age Pension Act was introduced. It was designed to assist low income seniors over the age of 70. In 1951, the Old Age Security Act replaced the original Act and it was at that time that Old Age Security became universal.
In 1957, the RRSP was introduced. It permitted Canadian workers to save 10% of their income to a maximum of $2,500 per year. The purpose of the Registered Retirement Savings Plan was to encourage those who did not have a company pension plan to voluntarily save for retirement. Today, approximately 38% of Canadian workers have a company pension plan and according to a 2014 poll conducted by RBC, 58% of Canadian adults have an RRSP.
Canada Pension Plan, 1966
It’s important to note that it wasn’t until 1965 that the Canada Pension Plan (CPP) was introduced.
The history of retirement does conjure up images of social disadvantage and deficiency and even today, unless you are fortunate enough to have amassed a small fortune, it is likely that you will rely on government assistance to fund at least a portion of your retirement.
Much has changed in the last 100 years. Retirement has evolved with the times. Today’s retiree is health-conscious, active, fun-loving and adventure-seeking. No rocking chair on the front porch for this group. Most are prepared for retirement, both financially and mentally.
It’s not surprising, that baby boomers who affected political and social change in the 1960s are now turning retirement on its head. This new breed of retiree was raised on television, movie theatres, fast food and fast cars. They were influenced by TV advertising but have also been influential consumers for the past six decades. They were, and continue to be the trend-setters. From advancing the popularity of rock and roll in the 60’ and 70’s to the health food craze of the new millennium, baby boomers are an influential cohort.
Now, as Baby boomers enter the post-work stage of life, they will likely re-created the image of what we have come to know as retirement. Retirement today, is nothing like that of our parents or grandparents.
Maybe “Jubilation” is a better term?
Retirement today, offers unlimited opportunity. It’s the time for doing all the things that you wanted to do when you were in the workforce but didn’t have the time for. The world is your oyster so to speak. The only thing standing between you and adventure is your computer mouse. You have the freedom to explore, discover, learn, help, achieve. You get the idea: the opportunities are endless.
It is a time of celebration: to recognize past accomplishments and create a new and equally important path for the rest of your life. It is a time to embrace life without the distraction of time constraints. It’s also a time of reflection as you investigate your spirituality and ultimately, your purpose in life.
Modern-day retirement offers a lifestyle that is much more profound and personally rewarding than that of our parents. We have the technology to keep our family close as we travel the world. We are just a click away from home from any corner of the globe.
But what shall we call this new and contemporary phase of life.
Perhaps we should adopt the Spanish word for retirement and call it JUBILATION. ( jubilacion)
But, how do we change a word that has become so entrenched in our culture? The word “retirement” has been synonymous with the after-work stage of life for well over 100 years. It is entrenched in all things to do with the post-work stage of life.
In reality we can’t change the word “retirement” but we can re-define it. It’s highly probable that In the not too distant future, even the most dedicated of career addicts will see the benefits of becoming a retirement neophyte, and blissfully and enthusiastically hang up the corporate towel to experience the jubilation of this time of life we commonly refer to as “retirement.”
Marion Humphries is an Independent Financial Broker with MK Consulting, specializing in Retirement and Care Planning. She is based in Aurora, Ontario.