Retirement

My wife and I have been pondering recently the feasibility of the American cultural value of retirement.  Specifically the idea that one is supposed to work hard and pay their dues so that when they reach 65 they can retire and not work for the rest of their lives.  We have been meeting with financial planners in the last month who have been trying to sell us this dream and give us their best advice on how to get there.  We have come to think, however, that there may be some flaws in their assumptions.  First of all the amount of money that would be required to cease working after 65 would be unrealistically large if one were planning to live off of the interest alone.  In order to keep up our standard of living with 1 car in a 2 bedroom (really 1) apartment with all the trappings of daily life we would need around $500,000-$750,000, assuming that we would earn a 6% return each year.(My parents suggest I would need 1-2 million)  And that would not be the kind of retirement that many Americans dream of which includes living in florida, eating out, traveling when they feel like it or buying big toys.  Many people I would assume have discovered that this is not realistic and have saved up equity in their home enough to sell it off and, with the interest on that plus supplements from social security, eek out a living.  Another method of retiring is by doing what my father is doing and working at the same job for 30 years and getting a pension for the rest of his life.  Neither of these last options sounds appealing for us since Social Security may not exist by the time we retire and neither of us is planning on working at the same job for 30 years.

Yet despite the lack of feasibility for us to save enough, this dream is based on recent cultural assumptions that have been lacking for the majority of human history and for the majority of current cultures around the world.  A major factor behind this manner of retirement is due to the cultural value of not burdening our children with caring for their elders and conversely valuing not having to care for your elders.  I can see the appeal of this sentiment since I would neither enjoy changing my parent's diapers or having my children change mine.  Yet, I wonder if something is culturally lost if we follow this idea.  Does this create more distance in our families? Does it teach us to not take responsibility for others?  The rest of the world seems to take caring for your elderly as a matter of course.  

It is also interesting that it is a recent idea that people would stop working before they were no longer able to.  I grant that the increase in the life span has complicated things where people live a lot longer after they are no longer able to work, which gets expensive.  Yet the model that most Americans seem to be shooting for is based off of rich CEOs who can afford to not work after 65.  This model would not be applicable to most Americans nor I would argue sustainable for our society.  

So here is our plan.  Firstly, if we have children, we need to teach them that it is our value as a family to care for our elderly and model this with our own parents. (They won't care for us if we ship our parents to the nursing home :) )  Secondly, We plan on working until we can no longer work.  Thirdly, we see the need for rest from work as important in order to maintain sanity and quality of life so we propose the idea of a "Sabbatical" every 7 years.  After saving enough money over seven years of hard work we would have a year long break to reflect, rejuvenate, and plan the next part of our lives. (And get excited about working again.)  If we start this plan when we are 30 we will have 7 sabbaticals before we are eighty.  Over this 50 yr span we would need to save roughly $280,000 (assuming $40,000 saved for each sabbatical yr,~$6,000 saved each yr), about the equivalent of a nice suburban home.  

One potential difficulty I forsee would be getting hired again after our sabbatical year.  We both have fairly marketable qualifications and are in careers where I think it would be possible, yet the older we would get the more difficult it may be to be hired by companies.  It would also be difficult to save $6000 per year especially if we had children and limited our income to one provider.  Also I have yet to do the math on what would get us more bang for our buck in terms of if we were to invest $6,000 in the stock market every year.   We will keep thinking about this one.  :)