The red and yellow hues have infiltrated the suburbs of Jozi, and one can hardly believe that it’s over a year since we commenced wearing masks and sanitising our hands with such zeal.
Autumn 2020 will forever remain in the memory as we trodded down the grass, circumnavigating our gardens as we attempted to stay running fit, hoping beyond hope that we would be permitted to run in our streets again. Any thoughts of self-pity were extinguished when we learnt of all the folks out there who were confined to small living spaces and lived alone.
With all the immediate pressing issues affecting our health and income, it is easy and understandable that one would lose focus on the critical end game, i.e. to retire with sufficient means to live a good life until we leave the planet.
This thought prompted some research into the history of retirement and delivered what we hope are some interesting facts. Retirement, or the practice of leaving one’s job or ceasing to work after reaching a certain age, has been around since the 18th century. Retirement as a government policy began to be adopted by countries during the late 19th century and the 20th century.
Before the 18th century, the average life expectancy of people was between 26 and 40 years. Due to this, only a small percentage of the population reached an age where physical impairments became obstacles to working. There had been a long practice beginning in the Roman empire to the modern nation-states of providing pension to those who had served in the military.
In the mid-1800s, certain United States municipal employees, including firefighters, police, and teachers, started receiving public pensions. In 1875 The American Express Co. created the first private pension plan in the US for the elderly and workers with disabilities. Early pension benefits were designed to pay out a relatively low percentage of the employee’s pay at retirement and were not intended to replace the employee’s total final income. By the 1920s, various American industries, from railroads to oil to banking, began offering pensions.
Retirement as a concept began to be widely adopted in the United States after the period of the Industrial Revolution, where numerous ageing factory workers started to show signs of ageing: slowing down assembly lines, taking excessive sick days and usurping the spots of more youthful, more profitable men with families to bolster. Also, older workers brought about unemployment among the youthful population by declining to resign. The Great Depression exacerbated things. Though some viewed retirement as an essential adjustment, many among the older populace resisted the idea of retirement.
In South Africa, the existence of retirement funds as we know them today is primarily due to the industrial revolution and the continuous competing need for high quality, skilled workers by large corporate companies. One way employers found to attract better quality workers was to provide some form of reward for long, loyal service to the company. And so, the pension fund was born. By the early 1920s, tax incentives were introduced by the government to inspire saving for old age, and due to this benefit, more and more companies started offering pension funds to their employees.
In 1956, the South African Government introduced what is generally considered the world’s first-ever Pension Funds Act that was specifically designed to regulate the business of pension funds. In the decades that followed, pension funds became more sophisticated with the growth of available investment vehicles and international investment channels.
According to the Mental Health Foundation, one in five present-day retirees experience depression. Those living alone because of bereavement or divorce are more at risk. Physical health problems can also make people more vulnerable to mental health issues. Recent studies have indicated that “retirement increases the chances of suffering from clinical depression by around 40 percent and having at least one diagnosed physical illness by 60 percent”. On the other hand, many workers have adopted scaling back on their jobs at around 55 or 60, or even changing careers, but still working for 15–20 more years.
As we rush into the next chapter of combatting this pandemic and the resultant economic challenges, we urge you to consider life after your career is over and how you can plan and provide for those future days: a retirement plan will be as necessary as an effective vaccine.