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Sunday, September 23, 2012

Retirement as an entitlement

I read a story in the newspaper today which highlighted the situation of a 55 year old woman who was having to rethink her retirement strategy. She was concerned that she would not be able to retire at age 65 as she had previously planned but might have to delay this until she was 70 or perhaps longer. It made me think about the whole concept of retirement and what underpins any system that allows people to withdraw from the working world and expect that their physical and material needs to be met. Don't get me wrong. I am looking forward to being able to retire. However, when you step back and look at the actual mechanics of how this can work, a whole series of questions arise.

I have previous written about the development of sedentism of human cultures as nomads settled down to be farmers and the moral dilemmas that grew as a consequence of the changes in human existence. The retirement question is in some sense an outgrowth of this same set of sedentism questions.

When we solely operated as family units, almost involvement was needed to meet the needs of individual members and the group. There was no such thing as retirement. As family members became infirmed, their engagement was limited because they could not bring much to the table. As social systems became more complex, obligations of single individuals to others also became more complex. Some relationships like those binding close family remained in the informal realm while increasingly our relationships to other and the attendant obligations fell increasingly into the legal realm.  However the obligations were defined and enforced, the well being of those involved depended upon the existence of adequate resources to meet essential human needs. There had to be enough food, shelter, fuel, and water for all to survive. Until very recently having a portion of one's life set aside without the requirement to create or gather essential resources was only a pipe dream.

Fast forward to the early 21st century. In the latter half of the 20th century the governments and many large industries in the US and Europe had created an expectation that large segments of their "mature" populations need not be gainfully employed much beyond the fifth decade of life. It must be accepted as a given that there is some point where such an expectation is not sustainable. Could we expect that students upon graduating from school at 18 or 22 years of age could move directly into retirement? The idea is absurd. A working population is an essential requirement to sustain our complex societies, to create and deliver food, to create power and maintain power grids,  to maintain and repair the technologies which support our fragile existence, to deliver health care, to manufacture and distribute all of the consumer goods, and the list goes on. For every person who withdraws from the workforce, that is one less person who can work on the above needs and one more person who will need to have needs met by someone else.

I believe the problem we have is one of disbelief and perception. We have grown up in such a world of plenty that we simply cannot imagine that our individual withdrawal from the workforce could possibly mean that we will have any effect on what is available to meet human needs. Thus, of course we should be able to retire at aged 65. Why not 55 or even 50? Why should I not have access to all this plenty, even if I do not contribute in any material way to its existence? What better entity that government to protect those who cannot protect themselves. Who could have foreseen that extension of those same protections to a larger and not so vulnerable audience would become the perfect tool to win elections.

The reality is retirement is a new concept and the selection of the age of 65 was random event based upon the life expectancy over 80 years ago. Promises were made when Social Security was founded that are now actuarial fantasy. Pension systems were created by companies based upon the same bad assumptions. They either figured out how to extricate themselves from those promises or they went bankrupt. How Darwnian!
The legacy of these faulty assumptions is now almost solely the province of governmental entities which are spared the requirements placed upon businesses. Their retirement schemes do not need be actuarially sound, at least in the short run. Is was simple enough to state that those who had reached a certain age were owed some sort of basic support, whether the accounting worked or not. When there were 25+ workers for every retiree, that might have made sense. It does not work so well when the ratio is 3:1 moving to 2:1.

It is not contestable that our population is segmented into those who are working and those who are not. The  question is what portion of our population will be required to work in order to support our population in an acceptable standard of living? It can be argued that this is a question of justice or fairness but that goes only so far when you simply do not have the bodies to get up each morning to accomplish what people need to do in order to have other human needs met. I think we can expect to live longer and to work longer. It is only reasonable.

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