History of Retirement (& Future Outlook)
Jan 18, 2023
Blueprint Income Team
- The history of retirement starts with Phase 1 when we weren't living long enough to retire.
- In Phase 2, we retired with Social Security and employer pensions, giving us secure retirements.
- We're currently in Phase 3, where 401(k)s have replaced pensions, and we have no way to manage longevity risk.
- At Blueprint Income, we're hard at work creating Phase 4, where we redefine financial security in retirement
Retirement can be divided in four phases: two that have passed, one that we’re living, and the next one that we’re working hard at Blueprint Income to create.
Table of Contents
History of Retirement: Phase 1 (Before 1933)
Let’s keep things in perspective — retirement is a relatively new phenomenon. Before the 1930s, Social Security didn’t exist and people rarely live to age 65. Even in developed countries, people often forget how new the concept of retiring is.
Average life expectancy in 1933 Source: CDC Men: 61.7 Women: 65.1
Retirement options: N/A
History of Retirement: Phase 2 (1933 - 1980)
Then, soon after the Great Depression, retirement security for older Americans sprouted up in the form of employer pensions and Social Security as people started to live longer. It happened because people were living longer than they were effective in the workforce, producing a pernicious old-age poverty problem.
Average life expectancy in 1980 Source: CDC Men: 70.0 Women: 77.4
Retirement options: Social Security & employer pensions
History of Retirement: Phase 3 (1980 - Today)
Retirement security has weakened as Social Security's future is at risk and employer pensions have been replaced by the 401(k). This system forces smart people to do impossible things like guess how long they’ll live, constantly make complex decisions about how much to save, how to invest, and how to spend, to name a few. The way things have changed around us has forced us, as individuals, to go from a retirement guarantee to retirement gambling (whether we wanted to or not) and one with little awareness or protection for our longevity.
Average life expectancy in 2015 Source: CDC Men: 76.3 Women: 81.2
Retirement options: Social Security & 401(k)
Future of Retirement: Phase 4 (starts today)
We need a Phase 4 to bring back retirement security. And we believe the online annuities marketplace we've built will be an integral part of it. In a world where Americans live longer, there’s more need than ever for sources of monthly income that continue no matter how long you live. Social Security is an example, but it’s not nearly enough for most retirees to retain their lifestyle.
Standards of living dramatically improved in the 20th century and we started living longer, but retirement became a more expensive and more risky proposition. Simple financial products like income annuities give you retirement security and a monthly salary no matter how long you live, meaning you can retire for a lot less money and a lot less fear.
Learn more about your annuity options here.
Blueprint Income Team
We are a team of finance, insurance, and actuarial professionals working to make it easier for everyone to achieve a steady and comfortable retirement. We write about annuities (the good and the bad) and provide strategies to help Americans prepare for retirement.