If you don’t find a way to make money while you sleep,
you will work until you die.

―Warren Buffett


These days, we tend to take retirement for granted, don’t we?

We know people who are already retired.

Or…perhaps…we know people who are about to retire.

Or…chances are…we might be in a position to tick the retirement box for ourselves.


Source: Image generated by OpenAI’s DALL-E


Yes, retirement is a desirable outcome. An aspirational outcome. But here’s the thing. Retirement is a relatively new concept. It actually hasn’t been around very long:

  • For most of our 5,000-year recorded human history, people usually worked until they were too sick and broken to continue. More often than not, people simply worked until they died.
  • Sadly, there was no choice in the matter. After all, there was no formal retirement plan. There was no social safety net. In agrarian societies, resources were stretched too thin to afford such luxuries for the common people.
  • A relaxed life, in old age, was only available to royals and aristocrats — and perhaps to a select few from the merchant class. Everyone else didn’t even get the crumbs. Tough luck.
  • According to the English philosopher Thomas Hobbes, human life was generally ‘nasty, brutish, and short.’ Indeed, up until 1900, the global life expectancy was only 32 years of age. This is shocking but true.

However, the big turning point came as the 19th century began to transition into the 20th:

  • In Germany, Chancellor Otto von Bismarck introduce the first formal pension system. The Old Age and Disability Insurance Bill of 1889 was designed to provide an annuity payment to workers once they reached old age. This came as part of the chancellor’s policy of State Socialism.
  • Here’s what von Bismarck had to say on the matter: ‘The real grievance of the worker is the insecurity of his existence; he is not sure that he will always have work, he is not sure that if he will always be healthy, and he foresees that he will one day be old and unfit to work. If he falls into poverty, even if only through a prolonged illness, he is then completely helpless, left to his own devices, and society does not currently recognize any real obligation toward him beyond the usual help for the poor, even if he has been working all the time ever so faithfully and diligently.’
  • Later, in the United States, the Social Security Act of 1935 was passed. This was a huge step forward towards establishing retirement as a distinct phase of life. As part of President Franklin Roosevelt’s New Deal, safeguarding the elderly became a matter of urgent national interest.
  • This ideal became the cornerstone of the Four Freedoms: ‘Freedom of speech. Freedom of worship. Freedom from want. Freedom from fear.’
  • Later, after the Second World War, we experienced an incredible boom in wealth, productivity, and life expectancy. This led to a profound shift in attitudes towards retirement. Pension plans like the 401(k) exploded in popularity. Suddenly, it was no longer just a government idea. More and more private companies jumped on the bandwagon as well.
  • Soon enough, the concept of retirement as a time for leisure and relaxation became widely accepted and aspired to. Indeed,by the second half of the 20th century, retirement was no longer about just being able to afford three meals a day. Retirement became more meaningful. It was about being able to enjoy a higher standard of living, filled with happiness and fulfilment in your golden years.

This brings us to the situation today. Here in New Zealand, our general life expectancy is just over 80 years of age:

  • This is more than double what the global average used to be in 1900.
  • With better healthcare, nutrition, and a social safety net, even the poorest retirees among us today are living much better than the average people would have over a century ago.
  • In fact, just consider this fact. Since 1960, our global GDP per capita has soared by 2,700%. Certainly, we are wealthier today than we ever have been.
  • But watch out. Our social safety net can only stretch so far. Already, our pension system is starting to feel the strain. This year, the youngest baby boomer will be 60, while the oldest is hitting 78.
  • Demographically, the baby boomers currently represent the largest share of our society. In fact, there have never been so many retirees in human history. And this will no doubt reshape our financial landscape.
  • Going forward, how will the baby boomers protect their wealth? How will they hedge against uncertainty? How will they build a portfolio to generate a passive income? What do they need to do to secure their retirement? What will their legacy be for future generations?

I won’t mince words here: retirement is the most urgent money problem of our time. It’s coming. It’s unavoidable. It’s a literal grey tsunami:

  • So, here’s the bottom line. I believe that more things could change over the next 20 years compared to the last 200. We can’t afford to be left unprepared. For this reason, we need to do a deep dive into this critical issue.
  • This is Part One of my two-part investigative series into the reality of retirement. We’re going to be covering all the controversial angles. Financial, social, and political. This will be incredibly provocative, but rest assured, I will leave no stone unturned… 

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