Retirement Outmoded Concept

Have you ever wondered where the concept of retirement originated? A German/Prussian statesman, Otto von Bismark, engineered the concept of retirement in the 1870s not as some altruistic effort to assist his aging countrymen, but rather to stave off his Socialist enemies.

Von Bismark united Germany through wars and diplomacy, but was known as a strong-willed, outspoken, overbearing yet charming leader who sometimes displayed a violent temper. In 1871 von Bismark was raised to the rank of Prince, and was appointed as the first Imperial Chancellor of the German Empire, retaining his Prussian offices, including those of Minister-President and Foreign Minister. By then, even his closest friends realized that they helped put a demonic figure into power.

In the industrial age, retirement was a necessity because long, hard, manual labor required a strong, youthful body. The tasks were rote and dangerous, the days were endless and most jobs offered no chance for advancement. Factory owners literally worked their employees to death, replacing them with younger, stronger ones as need be.

The Socialistic movement promised to nationalize the industries and factories that made their owners wealthy beyond measure. Otto Eduard Leopid became Otto von Bismark as Prince of Bismark, Duke of Laurenburg. He was of a privileged background having been born into a wealthy, distinguished house. Clearly, von Bismark was not interested in seeing the Socialists achieve their goals. Accordingly, he built the first European welfare state to sway workers to his political philosophies and personal ambitions.

In 1883 he passed the first national health insurance legislation, the “Sickness Insurance Law.” The next year he passed the Accident Insurance Law of 1884 and in 1889 he created the Old Age and Disability Insurance Law. Interestingly, that law provided a pension annuity for workers who reached age 70, a very ripe age at the time, especially for most laborers. The accident and insurance program covered all workers, and the health insurance legislation split the costs between employers and employees.

Today’s economy and most workers are much different than those of 130 years ago. The United States and most of the Western world is no longer an industrial based economy, and increasingly industrial labor is robotically assisted. We’ve morphed into a service and experience economy, prolonging not only our life spans but our productive years.

Yet our government’s retirement programs have not changed all that much since the days of von Bismark. I believe that can be attributed to our collective mindset. We haven’t begun the discussion how the last third of our lives can be spent happily and productively.

Sure, no one wants to work in a dead-end job for their entire life. The advent of the microchip and today’s technology enables many to pursue their interests far into old age, including imparting their wisdom to those who seek it. The New York Times has run several stories in its business section highlighting those who retired from full time work only to become successful consultants later in life.

While not a path for everyone, I wonder why so many of us take as “the norm” a concept originated from a German baron out of political necessity to retain wealth and power.

The word “retire” means “to take out of service.” Is that a state of being that most of us want? I propose that while most desire relief from “the daily grind,” humans have an innate craving to be needed. From the mother who still wants to help her grown children, to the Fortune 500 executive who is forced to clean out his desk due to a mandatory retirement age, most of us still want to contribute somehow.

I would say that a vast majority of my clients who reside on the islands do stay quite active. From donating time to nonprofit organizations, to mentoring, to becoming consultants themselves, many remain active contributors to society well into their 80s and even 90s. Scientific studies support the proposition that remaining active helps keep us mentally and physically fit.

Outmoded government programs, built on a retirement mindset, don’t support and instead discourage continued contributions to society. It’s too bad, for example, that Social Security benefits are taxed for those who work past the age of receiving benefits. There must be a better way than penalizing those who don’t want to be put out to pasture and find personally satisfying ways to produce income for themselves and value for those they help.

Entrepreneurs will eventually discover the untapped resource of those into their “retirement years.” Hopefully, government policies, programs and tax law preferences will encourage this path by making it easier for those who so wish to contribute, reforming 19th century programs to 21st century opportunities.

 The Sheppard Law Firm has its main in Fort Myers and also in Naples by appointment.

© 2017 Craig R. Hersch. Originally published in the Sanibel Island Sun.

2018-03-09T11:44:17+00:00

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