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Centuries of Retirement

Centuries of Retirement

| May 24, 2024

Spending a sunny day on a golf course with your friends. Pulling scrapbook supplies out of the back of the closet. Making memories with your grandchildren. Travelling the world. This is the American definition of retirement as we know it, and as many of our clients here at AZTEC Financial Group see it to be.

It hasn’t always looked like this, though; in fact, a few hundred years ago, retirement wasn’t even an option. Where did the idea of retirement originate from, and how did it become what it is today?

The Origin of Retirement

Though the modern version of retirement didn’t exist until the 1950s, the concept was adopted by a Roman Emperor named Augustus in 13 BC. He created a pension program to take care of a group of soldiers who had served for 20 years. The goal was to provide for them so there wouldn’t be an uprising.

Similar isolated programs popped up through the centuries, usually bestowed to victorious armies by grateful rulers. The vast majority of the elderly, though, had to rely on the support of their family or alms from the generous to provide for them if they could no longer meet the physical demands.

During the Industrial Revolution, though, there was a turning point. Unlike farm work, when the elderly could delegate the harder physical labor to the younger and stronger, this was not a reasonable option in factories. So these companies found themselves full of elderly employees who had no choice but to keep working to provide for themselves, and no spots opening up for the next generations. It was all around a difficult situation.

In 1889, a German Chancellor named Otto von Bismarck invented our modern version of retirement. To keep unemployed young men from uprising, he decided to pay workers of 70 and older to leave the workforce by choice.

As for the United States, the pioneer of pensions was the Baltimore & Ohio Railroad Company, with the American Express Company not far behind. Soon, pensions had spread to almost all companies. Railroad companies especially were known for their excellent pensions, and some even provided housing to care for their loyal elderly employees.

However, pensions took a hit during the Great Depression, and many older Americans yet again found themselves unprotected. This led to the birth of Social Security, created by Franklin D. Roosevelt in 1935. This, plus the economic growth following the second World War led to the 50s cementing the American Dream’s version of retirement.

A Shift from Pensions

Pensions were an excellent retirement resource for the time, but into the late twentieth century, a new retirement option emerged: 401Ks. The main difference was the source of the money; pensions were entirely the responsibility of the employer, but with a 401K, the employee’s savings directly corresponded with how much they put away.

Today, approximately three-quarters of American businesses offer a version of a 401K plan, while less than ten percent offer a classic pension plan (

The Future of Retirement

The world is constantly changing around us, and some concepts that seemed indefinitely cemented in Western culture have begun to shift. Classic retirement is one such concept.

Since the fifties, retirement looked like this: a person would stop working around 65 years old, and use the rest of their time enjoying the fruit of their labor. Stereotypically, that would involve golf, rocking chairs, and snowbird travels.

In the past few decades, though, this has begun to shift for a few reasons.

Financial difficulty. Some retirees find themselves in dire straits when they come to the realization that they weren’t as financially prepared as they thought. With social security only a fraction of their former income, they have to choose between drastically changing their lifestyle or returning to the workforce.

Retirement downsides. Even if a retiree is financially stable, many realize that retirement is not a bed of roses like they hoped. Studies show that retiring can actually shorten a person's lifespan. Between a lack of socialization, purpose, and activity, retirees sometimes age quicker than their active counterparts.

Encore careers. Seventy percent of American expect to work during their retirement ( Many have used this time to start their dream business, support a cause, and help others with the abundance of knowledge they’ve collected throughout their career. This helps them stay active, find a purpose, and feel fulfilled.

If you're approaching retirement age, you likely have questions about what all of this means to you. You could start finding answers here, or reaching out to Eric at (603)343-4515. We're here to help!