When someone says the word ‘retiree’, the image that comes to mind is a person with greying hair, perhaps wrinkling skin, and is ready to spend the rest of their days lounging at the kopitiam in the middle of the day with a newspaper and a hot cup of kopi. One would reasonably expect such a person to be in their sixties, well past the definition of a young person.

But in the past two weeks, not one but two young men, clearly still in prime of their youth, announced their retirement. One is the venerated Joseph Schooling, the only Olympic Gold Medallist Singapore has ever had, and the other, Ashish Kumar, once the top-PSLE scorer in his year, both hardly halfway to the retirement age. What is going on?

How Retirement Was Invented

Before the Industrial Revolution, most people were farmers and/or hunter-gatherers. Nobody worked for a salary, and everybody worked till the day they were physically unable to.

The first time that retirement was introduced in any country was in Germany in 1889. Under Bismarck, Germany introduced the first retirement and statutory pension scheme, paying a small pension once people turned 70. Back then, the life expectancy was only 55, so this meant that state-funded pensions only needed to support a small number of retirees at any point in time.

 

 

Fast forward to the Great Depression, where young people coming of age were finding it difficult to find employment in factories, and this was happening whilst some factory workers were getting old. Being less able-bodied than their younger counterparts, these old people were slowing down production lines while taking up precious employment vacancies which could be offered to younger people.

For the older workers, concerns that they needed to keep working to support themselves meant that many stubbornly refused to quit. To solve this problem, the USA eventually adopted the 1935 Social Security Act, and formalised the retirement age at 65. During this period, other western countries also adopted similar retirement and pension schemes.

Nevertheless, back in the 1930s, life expectancy was only 58 for men and 62 for women, and those who did live till 65 would go on to live for 12-15 years on average. Retirement sufficiency was hardly a concern.

Retirement In The 21st Century

In the 21st Century, better nutrition, living conditions and better healthcare has resulted in longer life expectancy, especially in developed economies. In Singapore, life expectancy as reported in 2022 is 83 years, meaning that the average person would outlive the retirement age by two decades.

While CPF may have enforced sufficient saving to support individuals for retirement in the past, the rising cost of living and the increasing longevity of the population means that some people may not retire with enough savings, and others may outlive their retirement savings.

On top of living till the retirement age, retirement in the 21st century has also come to mean accumulating sufficient wealth to support living and healthcare in retirement years, where it is assumed that the individual will get to spend their remaining years indulging in leisure.

Financial Independence, Retire Early (FIRE)

The traditional view of retirement at the retirement age is to accumulate sufficient wealth to support living past the retirement age. However, some individuals have been able to accumulate sufficient wealth to retire before reaching the retirement age. Up until recently, this has only been the case for people who work in very high paying jobs.

However, more recently, millennials have become increasingly savvy with financial management, retirement planning, and investments. Proponents of the FIRE movement advocate for being thrifty and learning to invest early on. If responsibly invested, savings could compound steadily and reach a stage where returns or dividends are sufficient to offset day-to-day expenses.

Someone who reaches this stage becomes financially independent since they no longer need a job and can choose to retire early.

Semi-Retirement

Aside from early retirement, another option that many people pursue as they near retirement age is semi-retirement. This involves re-negotiating with their employer to work shorter hours and have a reduced workload in return for a reduced salary.

Alternatively, this could also mean seeking employment in a less stressful job with fewer responsibilities and less workload.

While the individual may have enough to retire, they can continue to contribute to the company with the depth of their experience. Work provides impetus for individuals to stay active and continue to interact socially with colleagues and clients, and yet the shorter working hours reduce physical strain and allow the individual to enjoy other pursuits with the spare time.

Semi-retirement is certainly preferable if the individual enjoys their work and the colleagues that they work with.

Retirement And The Gig/Freelance Economy

Another possibility is for individuals to continue freelancing as artists, musicians, photographers or content creators. This is also becoming a popular option for young people. While the income in their early career may not be entirely sufficient for retirement, the savings from full-time employment in those years could be invested. So long as the freelance work is sufficient to supplement or cover living expenses, the individual can afford to ‘retire’ in the sense that they do not need full time employment from there on.

Some individuals may even choose to combine this strategy with migrating to a country where the cost of living is lower, and with a slower pace of life, while continuing to do freelance work on remotely from that location. Some popular destinations are Thailand and Bali.

For many individuals, these freelance gigs also represent work that they enjoy or are passionate about doing.

Retirement Does Not Have To Mean The End Of Work

One common thread through the different retirement options discussed is the fact that retirement does not mean that people will stop working for income. In Joseph Schooling’s case, like other sportsmen, retirement simply means that they are stepping aside from their sporting career. In Ashish Kumar’s case, it is similarly inconceivable that he would spend his days doing nothing else.

Rather, what seems more likely is that both individuals, having made their first pot of gold, can rely on investments and have the option to not continue with full-time employment. They can rely on side hustles or freelance work to supplement their living expenses. Similarly, there is nothing to stop an elderly retiree from doing freelance work or side hustles to stay active and supplement their retirement funds.

Retirement does not necessarily mean that one stops working forever. Perhaps, a better definition of retirement is the freedom to choose work that is fulfilling.

 

 

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