Blame it on Bismarck

The span of human history is roughly 5,000 years. But the concept of retirement has only been around for less than two centuries. 

The Invention of Retirement

In 1889, Germany became the first nation to create a government-run system to financially support its older citizens. Participation was mandatory. Contributions were taken from the employee and the employer. 

If you were lucky enough to reach 70 (life expectancy for males in Germany was less than 50), you started receiving checks. In 1916, they lowered the age to 65. 

In 1935, President Roosevelt copied the Germans. When the Social Security Act passed, eligibility was pegged at 65 (U.S. life expectancy was 61 at the time).  

Here’s the rub: After the Depression, medical care improved radically. So we began living longer. A lot longer. After WWII, our lifespans grew even more. 

Today, the average U.S. life expectancy is 78.8 years. Which means the 40 million retired Americans are going to be around a lot longer than FDR expected.

How does exponential thinking replace this retirement model? 

A Seismic Shift in Retirement

It’s a seismic shift that disrupts our existing linear belief that retirement is necessary and beneficial. Today’s outmoded system is based on Bismarck’s archaic rationale for introducing “old age insurance.” It was intended to free up jobs for younger workers during Germany’s transition from an agrarian society to the Industrial Age. At the time, it seemed humane to support older folks with no pensions or saving plans. (Not to sound cynical, but very few workers lived into their 60s. So there wasn’t a huge number of recipients.) In an era when you normally worked until you died, creating a little freedom from economic uncertainty in your twilight years made sense and was economically viable.

However, Bismarck’s Germany of 130 years ago doesn’t resemble life today any more than life in 1889 resembled the period 130 years prior to it. (Please recall that in 1759, we were still a British colony, yet to fight the Revolutionary War!) Studies done in the 19th century claimed that workers experienced a mental and physical decline starting at age 60. Based on that faulty premise, the Germans reasoned that seniors had done their best work and should exit the workforce — giving their jobs to the next generation. Science has long since disproved this false notion of declining skills, and real life shows the opposite to be true!

Retirement Has Done More Harm Than Good

I submit that our concept of retirement is a modern invention that’s doing more harm than good in U.S. society. Especially as the demographic pool of people over 65 swells from 13 percent in 2010 to over 20 percent by 2030.  

What was initially conceived as a temporary safety net for the elderly has evolved into a 20 to 30-year source of income for millions, and an extended vacation package for many others. It’s not only fiscally untenable, it’s a disincentive to creativity and productivity from our most experienced group of Americans. 

When I ask clients to share their life’s most meaningful experiences, it’s rare that anyone brings up a vacation or a golf game. Instead, they list work experiences, significant family moments, and important personal events. In almost every case, they talk about overcoming obstacles. 

Overcoming Obstacles and Exponential Living

That’s because humans are hard-wired to be “overcomers” — even against all odds. In fact, persevering in the face of hardships is often when we feel most alive and valued. One of my favorite inspirational books is Man’s Search for Meaning by Viktor Frankl. In it, he tells how he survived a Nazi concentration camp. He chose to see his brutal imprisonment not as the end of his life, but as something that gave it meaning. How? By identifying a noble purpose (regardless of circumstances) and then “immersively imagining” a good outcome. 

We’re living in a unique time. We are moving from the Industrial Age into an Exponential Age where change and technology are accelerating at an unprecedented rate. Strategies that worked in the past may no longer serve us in the present. The purpose that I “immersively imagine” is replacing the obsolete idea of retirement with a new exponential mindset — by seeing our aging population not as a burden but as a wonderful asset to benefit society.

Instead of being seen as tired, feeble, or irrelevant, our generation can leave an indelible, record-breaking legacy of value creation and ever-increasing contribution throughout our entire lives. That’s exponential.