Why did Retirement begin?
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Hey friends,
As you know - I’m not a fan of modern retirement.
But to progress society further along, possibly beyond this institution, we need to renegotiate our relationships with work and rest.
I believe studying the solutions to the problems of the past, helps us make improved solutions.
So today, I will be breaking down why *Retirement* happened in the first place.
(If you don't like history, you should, but I try my best to make it a compelling read.)
Today we will cover:
The First Pension System (Germany)
The Industrial Revolution
And the Impact on Workers and Society
Let's dive in...
But you might be wondering, Johnny, why don't you like retirement?
You don't want to save every paycheck for 60 years and then use it all on medical bills?
But hey, I get it. That's me. Retirement works well for some people. However, from what I’ve seen, it does not seem sustainable. This applies to both the individual and society.
Rates of depression soar when people quit working.
There is less community without a job. People lose their sense of purpose and identity, best illustrated by the question: What do I do now?
In addition, a significant portion of our GDP will be allocated to care for retiring boomers, the largest generation in history and possibly the largest ever again.
As birth rates decline and with smaller cohorts of taxpayers on the horizon, who will fund Social Security?
Finally, considering the 38 trillion dollars in national debt, I’m unsure whether the US can maintain a 20th-century retirement system for much longer.
But how did we get here? Why did Retirement, as an institution, happen?
Funny enough... Retirement is a relatively new concept.
In fact, the sewing machine (1846) predates the first pension system created in 1889.
During Otto von Bismarck's reign, Germany established the original retirement program as European economies underwent industrialization.
What does industrialization mean?
In a petite and sweet definition, it’s the shifting from a “man-power” based economy to machine-driven production. People left the fields and began working in factories.
Okay, it’s the 1880s, and we have machines that produce clothes more efficiently.
Trains and the telephone now exist, though sparingly.
But how does that translate to financial assistance and subsidized healthcare for older members of society?
Well, it wasn’t born out of the goodness of a company's or the state’s heart.
Business and Government leaders recognized the social fallout of an industrialized economy.
(And if governments fear anything, it's citizens revolting.)
The shift had widespread consequences not only for the production of goods and services but also for people’s livelihoods.
Factory work was demanding and uninspiring. (Occupational Burnout)
With greater prosperity, people started living longer. (Prompting: How can an older person perform a demanding job?)
People migrated in mass to cities. City apartments have less space for extended family.
Surely this won’t be a problem. GDP go up, right? That’s all that’s important, yeah?
The Shift
Instead of living off the land via farms, workers in cities survived on company wages.
Instead of relying on family members to work alongside, employees in cities relied on their co-workers and bosses.
The family was the central economic unit in agrarian societies, but industrialization changed that.
Before this turning point, families served as the primary safety net for the elderly. Younger family members often played essential roles in caring for their grandparents. Care extended to practical means like clothing and feeding but also provided emotional support—something modern retirement is sorely missing.
You can see a theme: strong families were central to pre-modern society.
(If you find this newsletter interesting, forward it to someone you think might benefit from reading!)
Why did Retirement happen?
Industrialization reorganized society.
The economic unit changed from the family to the corporation.
Retirement was instituted because the shift was so severe that governments and business owners realized the stability of society was at stake.
While GDP, efficiency, and life expectancy skyrocketed, the elderly were not prioritized.
So this created some questions.
Who wants to invest in a system that will not care for them when they are older and vulnerable?
Who will take care of those who sacrifice their body for the continuation of society?
Families would do so in agrarian societies.
Industrialized countries at the time needed an answer to these questions.
Back to 2025
The retirement solution has undoubtedly helped the U.S. (and the West) transition into a modern and globalized economy.
However, it created additional unknowable problems. The lack of family ties, loneliness, loss of meaning, and financial burdens are mounting.
But perhaps this history of “why we retire” helps us reevaluate how we approach work, relationships, and modern living.
As a review, today we covered:
The First Pension System (Germany)
The Industrial Revolution
And the Impact on Workers and Society