After the financial troubles of the past year, many young people these days find themselves wondering if they will be able to retire. Their concerns come after watching the markets drastically reduce the retirement savings of some of their parents and altering their perception that they would easily be able to retire comfortably.

In this post, we will examine the fundamentals of the idea of retirement in it’s current form, present an argument that a government-supported retirement is a thing of the past, and then cover what you can do to make sure you’ll be able to enjoy a comfortable retirement without having to rely on the government.

The Origins of Retirement
The idea of retirement in the United States originated during the Great Depression. During the Great Depression, not only did people lose a lot of money from the market crash, but there was also a high level of unemployment. Many of those unemployed were young men. When there are too many young men unemployed, they congregate and spark revolutionary groups. Revolutionary groups overthrow governments.

The government, seeing this as a threat and wanting to avoid revolution at all costs, needed to come up with a way to get these young men back into the workforce. What they came up with was a way to entice older workers to leave the workplace in order to make room for these younger workers. Having these young men employed would keep them occupied, and thus, would remove the threat of revolution.

The way the government came up with to entice the older workers to leave the workforce was this concept of retirement. They sold these older workers the idea that after they had put in so many years of work, they deserved to be rewarded by being able to live the rest of their lives without having to work. Their lifestyles would be funded by contributions from everyone who was still in the workforce.

The government was able to pull this off because of the age demographic distribution at the time. They way they figured, there would be many people working and contributing to the system and a relatively small number of retirees alive to collect from the system. The employed are happy to have jobs and the retired are happy to be enjoying free living. Everybody wins… for a while.

How Things Have Changed
If we look back in history, we often find that decisions made to alleviate the problems of one generation are often the catalysts of the problems faced by future generations. Retirement is one of these problems.

So, what’s different now? For one thing, people are living longer. When the concept of retirement was first put into practice, people would only live for a few years after they retired. Nowadays, advancements in medical technology have allowed people to live 30-40+ years past the retirement age. Future advances will further increase our life spans.

Another thing that’s different now is that the age distribution has changed. Because people are living longer, there are more older people than younger people. We’ve all heard doom stories that when the baby boomers retire, the system is going to collapse. Not really, but it will put a strain on it as more and more people are retired and living.

What it boils down to is this. The idea of a retirement supported by the government is unsustainable. There will not be enough Social Security by the time you retire and you shouldn’t rely on it. Instead, you should take responsibility for your own retirement and take making sure you’ll have enough to live comfortably into your own hands.

Young people of today have a few options at their disposal to make sure they are taken care of in their later years and don’t need to rely on a government-provided income.

Saving for Retirement
One option is to assume responsibility for your own retirement savings. If you start young, it is not unrealistic to be able to build a nest egg of a couple million dollars (in today’s dollars) that you can use to support your lifestyle after you retire.

Thanks to the power of compound interest and the amount of time young people have until they reach retirement age, investing a reasonable percentage of your income should be able to get you to where you want to be. We recommend aiming to save 10% - 20% of your income, depending on how long you have until retirement and what level of return you expect to get on your contributions.

Deciding Not to Retire
Another alternative is to plan your career in such a way that you end up doing something that you don’t necessarily want to give up. Nowadays, this option is becoming more attractive, as many careers involve intellectual work as opposed to physical work.

Whereas, older workers would tend to have trouble with the physically laborious tasks required of professions in the past, today’s professions (and the professions of the future) will be primarily based on services and information. This makes it possible for you to find yourself a career you like and be able to enjoy doing it for as long as you want.

The key to this, of course, is planning your career properly and making sure you have a career strategy in place that is going to allow you to achieve the things you want out of life.

The way to do this is to first sit down with yourself and determine exactly what you want out of life. You need to define what wealth and success mean to you.

Once you know where you want to end up, you can formulate a career strategy for yourself that will put you on the right track to being able to pursue a career that you will truly enjoy.

Both Saving and Not Retiring
Some people will do a combination of the two options described above. Pursuing this option should work extremely well because you would be able to keep your options open while you are saving and positioning yourself in a career that you enjoy.

When you reach retirement age, if you want to retire and live off of your savings, you would be able to go that route. If you decide instead that you want to continue working, you’ll have the luxury of having a decent amount of money saved up for the things you want to do.

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