Distributed Retirement

“Youth is wasted on the young” – “Retirement on the old”

The relationship between work and life is one of constant talk; finding the magical work-life balance that allows us to be both valuable participants in society, while also following our personal dreams to create a life of our own. However, the current structure is horribly inverted. We spend the whole of our prime years working behind a desk, saving for the future goal of retirement when we will be “freed” from the stresses of everyday life. We imagine a day without alarm clocks, meetings or office politics, and full of leisure, relaxation and happiness. However we fail to include the reality that many face with old-age retirement, that being small pensions, chronic budgeting, and a weak bladder.

However, I can’t help but ask, is this idea of retirement one that we have chosen ourselves, or one that has been forced upon us? Is it one that is well suited to the modern information age, or one that clings like a burden from the past?

To understand why retirement is the way it is, we need to go back and look at how it came about.

History of Retirement

Up until recently, most people simply worked until they died. It is mostly thanks to advances in medicine that our life expectancy has dramatically increased, giving way to retirement as we know it today.

While retirement is a fairly new idea, its roots spread back many thousands of years. It is said that as early as 13 B.C Roman Emperor Augustus began paying pensions for soldiers who served for 20 years. Having a stable source of income, those “retired” soldiers were then able to go about living without need for work.

This ancient idea of “military retirement”, enabled through pensions, is fairly common throughout history. In the 16th century, Britain and other european countries provided a similar pension for enlisted troops.

Retirement is for the weary soldier

However, it was not until 1889 (just over one hundred years ago) that the retirement we know today came to exist. The German government was under heavy pressure from socialists, and to preempt a revolution conservative minister president Otto von Bismarck proposed the idea of government supplied financial support for older members of society.

And so the modern idea of retirement was born. Well, not really. The retirement age used by the Germans just so happened to align with the average life expectancy, meaning that nearly all people still worked until they died. So while this is technically the birth of retirement, it was more of a political move to quiet socialists, since very few people actually lived to retire.

Retirement is a political move to silence the socialists

It wasn’t until 1905 when William Osler, a renowned physician, made a business case out of retirement. William argued that a worker’s golden years are between 20 and 40, after which they become less creative and “useful” in the workforce. He claimed that by 60 they were barely tolerable. Retirement became a way to force out high-ranking low-performing workers from the workforce.

Retirement is an economic strategy to remove low-performing workers

In the 1900s, improvements in science and medicine brought with it an increase in life expectancy, which meant that more and more people were starting to live past the age of retirement. However, unsurprisingly, most people didn’t want to retire. Retirement meant losing your sense of meaning and purpose that was provided by work. Retirees who were forced out of their jobs to make way for the younger generation had nothing else to do. It wasn’t until the boom of the 1920s and 1930s that things started to change. Capitalism was booming, making cheap entertainment accessible to the middle class. Retirees who previously had nothing to do could now access affordable entertainment, travel and leisure. In a sense, preventing boredom was the tipping point for making retirement popular.

Retirement is the time to enjoy the fruits of capitalism

By the 1950s depending which country you were living in, you were likely to receive government assistance for your retirement.

Despite being created earlier, the idea of private pensions – commonly known as 401(k) or superannuation – became popular in the 1980s when a Ted Benna used his interpretation of the law to create a way for his employer (The Johnson Co.) to contribute pre-tax dollars into employee funds for old-age. Without knowing it, Ted made the “American Dream” a possibility for all, but a responsibility of your employer.

In a combination of prospering economies, government pensions, and private retirement funds, most people have a path to retirement.

Retirement is accessible to all (one way or another)

The irony of it all, is that retirement started as a way to appease socialists, then gained popularity in business as a way to force unproductive workers out of the workforce, and only became popular when capitalism made leisure affordable.

history-of-retirement

What does this say about retirement? I’m not really sure yet, but the question I can’t help but ask is that despite most people having a path to retirement, is there a better way?

Problem with the Current Model

1. Wasting “Golden Years” working for our retirement

In our modern success-hungry era, the idea of work-life balance has become a bit of a joke. Everyone tells themselves that they are “hustling” to make their fortune, yet looking around hardly anyone seems to know exactly how big of a fortune is enough. So we spend our prime years of physical and mental clarity grinding towards success and wealth, only to look up in 25 years and realise that the wealth we were searching for was our lost youth.

2. Office workers are different from labour workers

Previously our economic value was tied closely to our physical strength. Factory workers and manual labourers were only of value to a business while they were young, strong and able bodied. Moving into the information age, physical strength has less to do with our economic value than mental health and aptitude, hence we will be able to work longer.

3. Current model is geared for business, not people

We spend the golden years of our lives working to provide maximum economic value, only to be forced out of work into retirement when we are less physically able to enjoy it. It is a model that assumes all its components are cogs whose purpose is purely economic output, not human beings whose lives are sacred. If there is anything we can hold sacred in this world, it must surely be our own life. Why should we spend it behind a desk saving for our forced retirement from the workforce?

4. Wasted potential of retirement

We could be getting much more value from our retirement if it wasn’t a single clump at the end of our life. Think of how different you are as a person with each decade that passes. The “you” at 20 is nothing like the “you” at 30. By hoarding our retirement until the end of life, we are missing the huge opportunities for growth that come with it. By the time we retire we are learning how to die well, but when did we get the time to learn how to live well? On our two week vacation last year? Doubtful. It seems many of us, through lack of time, are forced to leave this off until retirement.

This means that the life lessons we needed when living life come much too late, after most of it has already passed.

5. You might not make it

There is always the possibility (not as small as you think) that you simply don’t make it to retirement. Cancer, car accident, falling vending machine, it could happen. We’re putting all our eggs in one basket when it comes to retirement.

The Foolish Carpenter

Imagine you are an apprentice carpenter and have been given a special assignment to make a single desk. You have as much time as you want, however, you have only one chance at making this desk. You have never made a desk before and this is the only desk you will ever make. Ok ok, you get it, this desk is a big deal!

Now which would you do first: do you learn the art of carpentry or make the desk? This seems a stupid question, there is no way you would start making the desk before you learnt how to carve wood, else it would turn out a monstrosity. You would learn the how wood is handled, how to carve it, how to treat it. You would practice all the techniques of wood work until you had mastered them. Even if it took you a few years to become a master carpenter, it would be well worth it as this is your only chance at making this desk. Now that you had learnt all there is to know, had trained all your skills to mastery, now you could begin making the sacred desk.

Our lives are the sacred desk that we only get one opportunity to make. So why do we wait until the end of our lives to learn the art of living and dying? What is it that we are trading in our prime years of health and freedom in exchange for?

Is there another way?

This model of end-of-life retirement appears to us as something “set in stone”, something that has been around since the beginning of time. Yet in its current form, it has not yet made its 100th birthday. That is too young to be accepted as gospel, the cement is not yet dry. Furthermore, no generation’s life expectancy has been anywhere near ours, no generation has worked in the same labour-free environment as us, so how can we be sure that this barely-adolescent form of retirement is right for us?

In WW1 the machine gun radically changed warfare. The germans were slaughtering the Allies in droves. The English commanding officers only knew one mode of battle: charge with bayonets. So they continued using this outdated model, knowing full well how ineffective it was, but with no alternative. They foolishly charged into gunfire, not because they were foolish, but because they fooled themselves into thinking there was no other option.

As the world changes around us, our traditions often become outdated and ill suited. As a species we have one choice, adapt or perish. The internet is removing the need to work in an office, yet most of the world still spends two hours a day commuting. Computers have the ability to securely digitized all our services, yet our elections are still mostly done on paper. The world will slowly adapt to the new environment because there is no other option, it is adapt or perish. However, during this slow transition period we as individuals have one choice to make, how do we want to carve our sacred desk, for the past or for the future?

How can we rethink retirement so that it suits our needs as workers in the information age; an era where more and more people are being relieved from the hard physical labour, working in digital environments, straining only their mind. How can we rethink retirement to be a part of life, rather than the waiting period before which it ends?

A New Model of Retirement

Many of us have heard of terms such as “gap-year” and “sabbatical”. They are generally  once-in-a-lifetime events that people use as a break from the corporate world. These concepts have never been considered a form of retirement because they are sporadic and usually appear more of a coping mechanism for people stressed in their everyday lives, rather than an intentionally designed component of life. When Jane from Accounting takes her six-month sabbatical to India, you know she isn’t leaving to “find herself”, as much as to “forget the office”.

In the best selling book, 4 Hour Work Week, Tim Ferris challenged this idea of retirement and introduced a new idea called “mini-retirements”. His arguments against traditional retirement were much the same as what has been covered above, and he suggested that instead of saving up our retirement until the end of our lives when we are physically least able to take advantage of them, we should litter mini-retirements throughout our lives, so that at each stage of life, we can gain access to the benefits of retirement. Ferris suggests taking either a three month retirement each year or a longer retirement every few years.

This idea of mini-retirements has gained popularity through the entrepreneurial scene, as it is highly suited to professionals who can dictate their own working hours and generate passive income.

However, the problem I have found with the term “mini-retirement” is that there is a childish connotation that clings to it. When you tell people you are taking a mini-retirement, the mental image that comes to mind is one of playing mini-golf in a Hawaiian shirt, sipping mini-margaritas. Mini-retirements lack the credibility and respect that a traditional retirement holds. They seem less of a life plan, and more of an excuse dreamed up by young entrepreneurs to escape the difficulties of life.

While Ferris has done a great job in popularising the idea of mini-retirements, for it to be taken seriously I think it has to be re-framed in a way that builds more credibility.

Mini-retirements need to become an accepted structure for retirement.

Distributed Retirement

Distributed Retirement is reducing your end-of-life retirement by a few years and allocating the time regularly throughout of your life. It is trading in a few extra years of work later in life, for the luxury of regular periods of retirement throughout it.

Yes, Distributed Retirement is a tradeoff. It will mean working while your friends are fully retired. However if you agree with the problems above of a traditional retirement, then a Distributed Retirement is a smarter way to allocate your retirement, enabling you to use it most effectively in each different stage of your life. It is a practical approach to living your “dream life” right now.

Distributed Retirement is NOT:

  • Paid holiday leave
  • Paid sick leave
  • Once in a lifetime event (sabbatical)

Distributed Retirement is:

  • An alternate structure for allocating your retirement
  • A recurring event
  • Time to learn about life
  • Time to learn about yourself
  • Time to design the life you want to live

Distributed retirement is taking your original planned retirement age (R) and pushing it back by X years, then taking the months saved (12 * X) and distributing them throughout your life. This then allows you to calculate the number of months of annual retirement that you can take for in the remainder of your working life (R + X – AGE).

Months of Annual Retirement = (12 * X) / (R + X – AGE)

E.g. Pushing back my planned age for retirement (67 for Australians) by 5 years, gives me 60 months of retirement to distribute throughout the remaining 45 years of working life. This means I can take 1.27 months per year in distributed retirement while not affecting my “total time” retired in life.

Types of Distributed Retirement

The beauty of Distributed Retirement is that it can be allocated in many different ways depending on where you are in life. Earlier in life when free from the responsibilities of children and mortgages, you might allocate your distributed retirement annually, taking 1-3 months out of every year to slow down, learn and refocus. Later in life when more people are dependant on you, distributed retirement might look like several years of hard work for a longer 6-12 month retirement.

Annual Retirement (1-3 months every year)

Annual retirement means working hard for the 9 months of the year, earning enough to cover your yearly living expenses, plus the cost of not working for 1-3 months.

The goal of annual retirement is small but frequent retirements. Most importantly, by keeping the time spent away from work to a maximum of 3 months will reduce the strain on your employer and enable the likelihood of keeping our job. Negotiating one month of unpaid Distributed Retirement into your contract is possible; but nobody is going to keep your job waiting for six-months.

This form of retirement is highly suited to entrepreneurs, employees of forward thinking companies, or professionals with strong negotiating powers, who have influence over their working schedule and possibly even a source of passive income.

TL;DR: Short retirements every year. Suited to progressive careers.

Olympiad Retirement

More suited to individuals who can’t negotiate more regular distributed retirement, or due to family reasons wish to spread out their Distributed Retirement over longer periods. Spend 2-5 years working towards a larger 6-18 month retirement.

If a six-month block in your “resume” sounds frightening, then remember the point of Distributed Retirement is to make your retirement more effective. This means that block won’t simply be an empty space in your career, but a story of growth, progress and discovery that can turn you job interviewer’s doubts into respect.

Due to taking a larger block of time it is unlikely to keep your current job. Hence, this form of retirement is more suited to be allocated between changing jobs.

TL;DR: Long retirements spread out once or twice a decade. Suited to traditional careers.

Where to next?

I’m currently halfway through my first Distributed Retirement in Japan. I’m still figuring out how to make this work every year, from a personal and business perspective. There are still a tonne of kinks to work out such as:

  • How to finance for a Distributed Retirement
  • What to do on your Distributed Retirement
  • What about your Superannuation (401k)
  • What Distributed Retirements mean for companies

If these sound interesting to you, make sure you are subscribed to my newsletter to stay up to date with progress.

What are your thoughts on a Distributed Retirement? Could it become mainstream in the future as a new model of retirement?

sebastiankade

Sebastian Kade, Founder of Sumry and Author of Living Happiness, is a software designer and full-stack engineer. He writes thought-provoking articles every now and then on sebastiankade.com

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