Years ago, I bought my brother a well-worn Denarius for his birthday – the coin of the realm in ancient Rome. To me, it’s fascinating that anything from that time period survived. It almost seems like it shouldn’t have. Rome was the birthplace of many great inventions, many of which were lost during the Middle Ages and had to be rediscovered.

But one of the things that wasn’t lost was the invention of the annuity. Annuities were a way for the Roman government to pay its legionnaires for their service after they had served their time. A legionnaire would “retire,” then receive a lump sum of money equal to 13 times his annual salary which would have been approximately 3,000 denarii. If the soldier had received his pension in the form of an annuity, and given the interest rates of the time, it would have been the equivalent of 30 ounces of silver a year for the rest of his life. A centurion received even more. There are also some accounts of speculators selling annuities to wealthy citizens who could afford to buy them. But for the most part, annual pensions were reserved for Roman soldiers.

Why did the government bother paying its soldiers so generously?

In Lives of the Twelve Caesars, Suetonius explained:

“Moreover, all the soldiers that were in any place whatsoever, Augustus tied to a certain prescript form and proportion of wages and rewards, setting down according to the degree and place of every one, both their times of warfare, and also the commodities they should receive after the term of their service expired and their lawful discharge: lest that by occasion of old age or for want they should, after they were freed from warfare, be solicited to sedition and rebellion.”

Caesar was concerned about bored or disgruntled soldiers with no work who might revolt against the Roman empire. His bet was to pay all soldiers a generous sum of money, and hedge that payment with additional gifts of land grants. The money and land kept the retired soldiers fiscally fat and (for the most part) happy.

In essence, the retirement package was designed to pacify the warrior. Given the historical context, perhaps that was a wise move.

Even with these generous retirement incentives, it wasn’t expected you would “retire” from a career of fighting unless it was on the battlefield. And most Roman citizens did not enjoy what we would call “retirement.”

The Birth Of Institutionalized Retirement

The modern concept of institutionalized retirement was actually born in the late 19th century in Germany, under the country’s first Chancellor, Otto von Bismarck.

In 1881, Bismarck was facing opposition from Social Democrats in the Reichstag. He believed he could undermine the socialist movement, and get sympathetic voters to leave the party, and also establish programs which he truly believed in all at the same time by offering a social welfare program with his name attached to it. His pitch to the public was simple: “Those who are disabled from work by age and invalidity have a well-grounded claim to care from the state.”

In other words, the rationalization was that age itself was the cause of disability, and thus once you attained the magical age of 70 you were due a retirement package from the government. To justify this, it was “discovered” that men over the age of 65 (and definitely by age 70) have a higher incidence of illness and death, as well as cognitive decline, and therefore should retire on that basis.

Bismarck presented his idea – which amounted to the government paying people to quit working – to the Reichstag. This would have the side effect of “creating” more jobs for younger people, thus pacifying both aged workers and young socialists. It also undermined the Socialist Movement, which threatened the stability of the German Empire.

It’s interesting that his explicit justification for these programs was to create incentives and establish control over the population. From Bismarck: The Man and the Statesman, by Alan John Percivale Taylor: “Whoever has pensions for his old age is far more easy to handle than one who has no such prospect. Look at the difference between a private servant in the chancellery or at court; the latter will put up with much more, because he has a pension to look forward to.”

By 1889, the system was put in place. The way it initially worked was all citizens over the age of 70 would get retirement benefits, assuming they lived that long. Government benefits aligned fairly closely to life expectancy, with the implicit assumption that individual benefit payments would not be payable for too long after a person retired.

This was the first real model of a government-endorsed, sponsored, and institutionalized retirement system. It wouldn’t take long before Europe, and eventually the US, followed suit.

The Birth Of Social Security

In the U.S., the Social Security system was the framework for the modern retirement system, which itself was inspired by Germany’s system.

Before Social Security, some private pensions did exist in the U.S., along with municipal retirement benefits in large cities, but these were somewhat rare. For example, in the 1920s railroads, oil companies, and some banks started promising limited old-age benefits for employees. These early pension programs pegged retirement to age 65, but in total were only offered to roughly 15% of the labor force in the U.S. And these pensions were given and withheld at the discretion of the employer, so they were by no means guaranteed. There were also some old age and disability pension schemes for veterans, which date back to 1776, and a large-scale pension for veterans of the Civil War and their families. But again, not all soldiers received pensions.

It was the U.S. Government that finally institutionalized the idea of “retirement for all” with the Social Security program. And, as in Germany, the system was set up in such a way to implicitly (and sometimes explicitly) manipulate, control, and otherwise “motivate” the population.

Prior to Social Security, retirement was not guaranteed, nor was it necessarily desirable. And when state governments passed legislation to provide money for old people in the U.S., many of the people who qualified for benefits were reluctant to accept “welfare payments” or accept any kind of financial help from the government. The result was that only about 3% of the elderly ended up receiving benefits under state-run programs.

Once the Social Security program was put in place, however, all that changed. Everyone received benefits. And the idea of retiring from meaningful productive work wormed its way into our culture.

Over the years, this basic idea has evolved to mean different things to different people. But the core of the idea is the same. It doesn’t matter whether a person rejects the idea of Social Security, but accepts the idea of private corporate pension plans, or government-created qualified retirement plans (e.g. 401(k) plans, IRAs, SIMPLE, SEP, Roth IRAs, 457 plans, profit-sharing plans, cash balance plans, 403(b) plans, etc.). The idea is all the same: quit working at some arbitrarily defined retirement age. Spend your “golden years” relaxing, not working.

The whole idea of retirement is to passively accept resignation, to quit – to give up.

This is a perfect recipe to pacify the population, to make strong men weak, and to make weak men weaker. And eventually, to kill the populace while keeping a smile on its face.

This is where we got The Company Man™ – a loyal corporate soldier, willing to do what he is told for 40 years in exchange for a comfortable pension plan at age 65 that will pay him to sit around all day and watch re-runs of The Price Is Right and maybe play some golf on the weekends with other retired company men, reminiscing about “the good old days.”

Even though the 401(k) (and other similar plans) have effectively replaced the guaranteed pension plan, and the March 2023 Social Security Trustees’ report shows Social Security will become insolvent and require either a massive 20%-23% cut in benefit payments to all retired people in 2033 or a massive increase in payroll taxes to keep the current system going, people are still wedded to this idea of “retirement.”

OK, So What Did People Do In The U.S. Before Retirement Plans?

Before everyone decided it was a good idea to quit at the magical age of 65, people actually worked for a living. I know this sounds weird, but hear me out. Because meaningful, challenging, productive work is very good for both your mind and your body.

Retirement wasn’t something you wanted to do back then, either. It was something you were forced to do because you either got hurt, got sick, or just plain didn’t have the energy and ability to recover from a hard day’s work like you used to, so you had to slow down. Slowing down meant lower productivity and (possibly) less money, which is also why you had savings. Savings might supplement a lower pay in your old age, but it didn’t replace the need (or your desire) to work.

A large personal savings also meant you could invest in yourself, your business, or something (anything) productive for your future. In the old days, men built big, expansive, business empires with their savings. They had large families to support. They provided a good education for their children. They increased their standard of living for themselves and their spouse. They did this all through accumulation of personal savings, large life insurance policies, and endowment policies which gave them even more reason to keep working.

It seems like such a bizarre idea today, but without a retirement to look forward to, you have to keep working. You have to keep making future financial plans. You have to save money and keep investing in yourself, your business, your life, with an eye toward perpetual growth for as long as growth is possible. And when growth is no longer possible, death quickly follows.

Retirement And Cognitive Decline

There were 55.8 million retired Americans in the U.S. as of 2020. That’s a lot of people. Think about it this way: 1 in 6 people in the U.S. are over the age of 65. Compare this to 1920, when that proportion was 1 in 20.

It shouldn’t be surprising that the risk of dementia before institutionalized retirement was lower than it is today. There are even studies showing that people who delay retirement have a much lower risk of cognitive decline and of developing dementia. But you don’t necessarily need studies to “prove” that retirement is detrimental to one’s well-being, and that sitting around all day in a rocking chair watching TV results in cognitive decline. You can observe what happens to any independent person when they quit working, sit around all day, and then eventually are forced to go live in a nursing home. Those people decline both mentally and physically. And they do so very quickly.

When my great-grandmother stopped working, she did exactly this – sat around all day, and didn’t do much of anything. I was only a teenager then, but I still remember it very clearly. I loved my great-grandmother very much, and her decline had a profound effect on me as a young man.

She did not exercise her mind or her body. Her decline was slow, but somewhat predictable even back then. She developed dementia, became weak and frail, and died in a nursing home having completely lost her memory of who her family was. It was a terrible, terrible fate.

This is a fate that awaits you if you give up on being a productive human being. Of course, nothing in life is absolutely guaranteed. Perhaps you decide to never retire but develop dementia in your 80s or 90s anyway. Guess what? You probably would have developed it sooner if you retired at 65. The research on this looks pretty strong. The longer you keep working, the lower your risk of cognitive decline. This squares with my own experience and observations of other people.

Bottom line: If you give up on life, it will give up on you.

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