I recently finished reading a fascinating book by a friend of mine, Richie Norton, called The Power of Starting Something Stupid. This book had me writing pages of notes and inspired me to take immediate as well as long-term action. I foresee a number of posts on principles in this book. However, there’s one question in particular this book has caused me to think about in more depth. It’s a question I’ve been discussing with my wife for a few weeks now in regards to our family as well as the world. Why is there a cultural expectation and a sense or urgency for a pension?
Where in the heck did this idea come from and when did this all start?! It seems like we sacrifice the best of ourselves, our time with loved ones and our greatest dreams, for the anticipated benefits of retirement. But this is something that was not expected or sought after for most of history and it seems like this only started about 100 years ago. My limited knowledge of history tells me retirement as it exists today did not exist for most of mankind’s experience. Mankind seemed to have done alright without a retirement plan up til this last century. What’s changed so drastically? How is it that we have come so far, accomplished so much, and done so well all these thousands of years without a pension, but now it is inconceivable to live without preparing your 401k or planning for retirement? How did we get here? Why are we so afraid of the future that we’re so willing to give up so much of the present?
Kahuku Sugar Mill on the North Shore of Oahu – the epitome of the Industrial Revolution.
History of a Pension
A very small part of Richie’s book gives insight to this question. As a result of the Industrial Revolution companies wanted workers to give up more of their life and time to meet production demands. So, one incentive companies would use was to delay a portion of payment to the employee with a promise that the money would be dispersed on the back-end. The overall idea went something like this, “If you give up your life now to work for me until you turn 65, I will delay a portion of your pay so that you can live comfortably later.” Everyone thought/thinks this was great. After 65 THEN you can start living the life you want to live and insure a comfortable old age. The problem is that by the time you reach the appropriate age, you usually don’t have much of a life left to live. You’ve sacrificed most of it for the job.
This idea has become so ingrained in Western culture that it seems indispensable. We think this is just how life is and there is nor has there ever been any other way. You’re born, you go to years of school, you go into debt for school/cars/house, you get a job, you try to pay off your debt with your job, you retire, and then you die. It is hard to imagine that there could be any other way to live even though this model has only been used for a very short period of time compared to way people lived and accomplished great things for thousands of years prior.
Know what happened as a result of the Industrial Revolution? I think we’ve basically died. Our dreams die on factory floors and in cubicles every day. And we keep dying for something we think we cannot possibly live without – a pension. We give up our health, we sacrifice time away from spouses and children, we sacrifice the dreams we had as kids, and all of this so we can have what we think is the most secure future. We don’t think there is any other possible way.
I’m not so sure this is true. I know I’ve believed a pension is worth sacrificing for the future for a number of years and I currently work towards one. But thinking back to my great-grandfather, a man who built a log cabin in the dead Winter of Canada with an axe and his bare hands, I don’t think he or anyone before him had a pension or even cared for one. He just wanted to provide for his family and develop the talents he was given – and he did just that without giving up his life or his time with his family for a pension. It seems like it is only 3 generations back that we operated outside of the idea that we HAVE to prepare for retirement, a time when we think we can finally start living, by sacrificing everything now. I’m not so sure that HAS to be part of our culture. I’m glad that lately I’ve had a chance to become familiar with people like Richie Norton and Scott Dinsmore from Liveyourlegend and that they are writing about how to live differently.
The rise in pensions also correlates with the decline in families carrying for the old. It used to be that you worked until you were unable, and then your kids took care of you. Today people want independence in old age and as such require some cash flow.
I strongly agree. I think the surest “safety net” is to have a few kids and live your life in a way that makes them love you, respect you, and want to take care of you if needed. They’ll be there for you if your pension isn’t enough (or if you don’t have one) and when social security dries up.
Erik, you remind me of a comment I heard at Kapiolani Hospital while I was there with my wife for one of her ultrasounds. There were a handful of Marshallese women in the room talking. One woman asked another how many children she had. After the response was given, the first woman said something along the lines of, “Oh good. They’ll make you happy now and you’ll also have enough to take care of you when you’re older.” I think you’re right, Erik. Having a strong family that will take care of you because you’ve developed strong relationships of love throughout life is the best “safety net” I can imagine. I think that idea has slowly been lost on Western culture.
Mike, what’s funny is that the wife and I were talking about this very point earlier. It seems like we’ve lost the cultural desire to take care of our elderly in the home because demands of a job require all our time so we can provide for our needs now – there’s much more to this point. On a side note, this seems to have skewed our view on death as well since death does not happen in the home with family as regularly as it used to. Thanks for your ideas, Mike.
Marc, I also think that part of it is that we spend a lot lot more on our cars as a % of income than our ancestors spent on their wagons. They would never have taken out a 7-10 year loan on transportation. Much less 30 years to pay off their house. I think those are some reasons why we need to now work for 50 hours a week for 50 years. But it doesn’t have to be miserable and monotonous. Buy modestly, get out of debt, and then start living the dream part time until it can ramp up till full time. Just like Richie teaches in his book. We are 6 years into paying off our 6 year life in Hawaii which came at a price. But we don’t regret it. That too is a luxury our ancestors would not have taken. We pay the price for our comforts and experiences. Take responsibility for our own lives and happiness. Love the blog man.
Great points. Thanks for chiming in!
Interesting stuff, I definitely agree with the twist our country has taken in regards to pension. However, I don’t think it started with the industrialists; rather the industrialists twisted a good idea to benefit big business. Let’s look at Ben Franklin who “retired” at 49 years old. Before he was 49 he was a paper delivery boy who worked hard and started his own newspaper and made enough money to retire at 49: an interesting life, but that is not what we remember about him. After he retired (he does not use the term “retire” in his autobiography, rather he says he reached his “point of choice”) So after he reached his point of choice where finances were no problem, he invented the bifocals, the Franklin stove, the lightning rod, a carriage odometer, the glass harmonica, sunglasses, etc. He served as President of Pennsylvania, America’s first Postmaster general, US minister to France and Sweden, he had a large influence over the drafting of the Constitution, he started several colleges and libraries, etc. For all his inventions and for his service to the community and country, Ben Franklin did not take any profit. He did not patent his inventions. He could do this because he had reached his Point of Choice at such an early age. Our culture has taken the desirable example of people like Franklin and sold us a cheap version, which we call retirement but it is really like working for the “company store” like the old miners. Why are we so gullible, and why do we let them do this? Because it’s “easier” and because we are lazy. It is a thoughtless endeavor…you can put your mind on hold for 40 years–Work from 8 to 5, machine-like. Thanks for the post. I have many thoughts about this stuff.
[…] being my acceptance into this awesome group as well as reading the blog post of one of its members (https://marcallred.com/2013/01/22/pension-when-did-this-all-start/), has lead me to this point. This blog will be my effort to impart whatever lessons I learn in my […]
I don’t think there is anything inherently wrong with a “pension.” Darren qualified for a pension working at UPS when we were first married and that helped us move to Montana and complete his graduate work. I actually don’t know too many people who officially retire and live on their pensions alone. Some professions require you to retire at certain ages such as a commercial pilot and so the pension comes in handy when finding other meaningful work. Personally, we have always saved, but taken advantage of opportunities and stretched ourselves thin sometimes to enjoy life more in the present. We are sort of a “sandwich” generation. Taking care of elderly parents and helping out young adult children. Personally, I would do anything to take care of my father and grandfather, but knowing they have saved is a great relief. Most of my time and energy can go to building relationships instead of working more to financially pay their bills etc. I enjoy your talking points Marc. You are thoughtful and smart. Thanks for the opportunity to think and respond.