The Retirement Trap — Should You Really Stop Working at 65?

The Art of Manliness - The Art of Manliness

The modern retirement model, based on outdated assumptions about lifespan and work, causes stress and missed life experiences. Financial advisor Derek Coburn argues for rethinking retirement by working past 65 to reduce

Key takeaways

• Retirement at 65 is outdated due to longer lifespans

Transcript preview

One of the things I've learned after running AOM for nearly two decades is that the fun part is creating writing articles recording podcast designing products things like that the less fun part is all the operational stuff that comes with selling those products online and that's one reason we've used Shopify for the a-wm store shopify is the commerce platform behind millions of businesses around the world and 10% of all e-commerce in the US it handles all the stuff you don't want to spend your day worrying about inventory payments analytics you're selling your first product or managing an established store, Shopify gives you the tools to keep things running smoothly. They've even built in AI tools that can help with product descriptions, page headlines and product photography. Plus as a customer you've probably seen that purple Shopify button. There's a reason why it's everywhere. It makes check out incredibly easy, which means fewer abandoned carts and more completed sales. It's time to turn those what-is into reality with shopifyify today. Sign up for your one dollar per month trial today at shopify. Shopify.com slash Manliness. Brett McKay here and welcome to another edition of the A-O-M Podcast, which since 2008 has featured conversations with the world's best authors, thinkers, and leaders that glean their edifying life-improving insights without the fluff and filler. The A-M-Podcast is just one part of the McKay mission to help individuals practice timeless through thought, word and deed. Also be sure to explore our articles in Art of Manliness. Read the deeper dives we do in our sub-stact newsletter at D. D. into real world action by joining the strenuous life program at strenuous life. Now on to the show. The modern idea of retirement was built on a bet that turned out to be wrong. It assumed people would spend most of their lives working and only a relatively short period of time retired. Instead, many Americans now reach 65 healthy, active, and with an entire third of their life ahead of them. Yet we're still using a retirement model designed for a world in which old age and fewer people expected decades of life after leaving the workforce. My guest says that outdated assumption creates some unfortunate unintended consequences. It causes people to stress excessively about money, postpone meaningful experiences with family and friends and sometimes sacrifice the very things that make life worth living in the first place. He argues that by rethinking retirement, not necessarily eliminating it, but reimagining it, we can enjoy more of our lives now while actually feeling more secure about the future. His name is Derek Coburn, and he's a financial advisor and the future. His name is Derek Coburn, he's a financials, and he's a financial advisor, and he's a financial advisor and he's a financial advisor and the author, and the author, and the author, and the author of the author, and the author, and the author, and the author, and the author, and the author, and the author, and the author, and the author, and the author, and the author, and the author, and the author, and the author, and the retirement. Today in the show, Derek explains why the judicial retirement model came about, why it may no longer make sense for many people, and how working even a few years past 65 can dramatically change the math of retirement retirement and how working can free you up to spend more time on what matters most right now, whether that's traveling, strengthening your marriage, or making the most of the limited summers you have left with your kids. After the show is, check out our show is over, check out our show notes at Awam. I S. Retirement. Retirement. All right, Derek Coburn, welcome the show. Hey Brett, thanks for having me. So you are a financial advisor and you got a book out called Let's Retire Retirement, which you're making the case, we need to retire this idea of retirement that we have. So you are a financial advisor and you got a book out called Let's retire retirement, which you're making the case we need to retire this idea of retirement that we have. Let's talk about retirement in general first. when people think of retirement they think about stopping work around age 65 and then never working again it's like a fixture in our culture and it seems like it's always existed so you've seen your grandparents retire you've seen your parents retire but this idea of stopping work completely at age 65 to go on cruises and putts around the house this is a relatively new idea it's like maybe just a little over a century old and what's interesting you talk about this in the book it was created and conditions that no longer exist today So can you give us a short history lesson on the origins of our modern idea of retirement? Essentially back in in 1889 Germany was putting together the first ever social insurance plan to take care of their older workers who were phasing out of their jobs and the Chancellor at the time Otto Van Bismismarck picked the age of 70 as the age for them to start receiving benefits because quote that is the age at which people are expected it to die, end quote. And literally picked the age because they didn't think they would have to pay anyone because they were going to pass away shortly thereafter. And then like 27 years later, they lowered the age to 65 finally, but this was at a time when life expectancy if you made it that far would only get you into your late 70s. So back then even if retirement did exist, it's like you would only have to come up with like a third of your income because you were getting some government subsidy to go along with everything else. And so now, now fast forward. to today if you make it to 65 your life expectancy is going to be in the mid to high 80s if you make it to 75 or 80 it can be even longer than that yet we've never updated this age of 65 to keep up with how much longer we're living. Okay so late 19th century some old people can support themselves anymore because most of the jobs back then were physical and they couldn't do them anymore because they're just old and beat down. In Germany they set the retirement age at 65 because you know most people didn't live longer than that. few people would actually collect benefits for very long, which that made the system financially manageable. But then other countries like the US adopted similar systems for retirement. But today people are living a lot longer. A lot of jobs are knowledge work jobs these days, their office jobs, so we're not beating ourselves too much up anymore and you can do that for a long time. But we still kept this idea that, okay, at age 65, that's when you should stop working completely. And so not. now people have to amass a ton of money, enough money to live on one decade, two decades, maybe three decades past 65. And so they go to the financial advisor, their financial advisor is going to give them a number. And this is the number they need to get to retire, never work again. And it varies, but I think the general rule is to save and invest enough that you can safely withdraw about 4% of your portfolio each year in retirement. And it varies, which means a you know roughly it's like 25 times your annual retirement spending so if you plan on spending something like 75,000 dollars a year in retirement you'll need to have almost 2 million saved by age 65 and a lot of people struggle to reach those kind of numbers and you argue that there are several problems that arise out of this and one is that just people have a lot of stress and anxiety about the retirement and they're trying to save enough to stop working at 65 and never work again and never work again And so they just put their nose to the grindstone in their 30s, 40s, 50s. They don't spend money on having fun or time having fun. They just figure, I've got to work, work, work, safe, safe, and I've got to wait until retirement to finally enjoy my life. Yeah, it's going to allow me to finally live the life I want to live one day. So if I sacrifice and I put off things like my health, the relationship that I have with my spouse and my kids, my travel, me having a good time. and don't focus on those things for 30 years then maybe one day I'll be able to do all of those things. But the sad thing is by the time you get to 65 you might not have the Vim and vigor to do those things you've always wanted to do because you're no longer 30 or 40 anymore now you're 65. Yeah my dad came down with dementia at the age of 62. He had it for 10 years before he passed away. Nothing is promised and so a lot of people think like well what if I get injured I get injured what if I get hurt. What if I get hurt? lose my job well if we're sitting here at 75 and those things happen like all of the research all the data shows us that the things that people regret are not you know I didn't work more it was I didn't spend more time with the people and things that were most important to me how have you seen that play out in the clients you've served have you seen people who you know they got to 65 70 and they retired and you know sure they got enough for retirement but they look back in their life like boy at not taking more advantage of the time I had when I was younger. Yeah, my book has been pretty triggering for some people in their 60s and 70s because they sort of wish somebody would have made them aware that they could have done things differently. And you have a lot of people that have put off and they have, it's essentially like the ultimate form of a rival fallacy. People felt like they were going to have this amazing life, being able to do all these things and when they get there, it's not what they thought it was going to be. over the years and very few ever came in before the book with their hand raised knowing that they didn't want to retire so I would humor them and I would say what do you want to do when you stop working and the couple would say we want to travel the world together and I would say great me too when was the last time the two of you went out on the date and more than 50% of the time they would just look at each other and not have a great answer I have other clients who have said that when they want to play golf five days a week and I ask them how often of them say that they're not playing golf and it's like look if we're not you know working the muscles if we're not developing the relationships to have the physical skills and the relationships to play golf 20 years from now I think it's gonna be hard for us to all of a sudden start to make it happen once we get there all right so this idea of a hard stop retirement