A World With Most in a Work Optional State

People who reach a comfortable retirement have savings, assets and investments that enable them to pay for their spending without being required to work. Financial institutions and governments have described this as an achievable and desirable state for most of the middle class. It was generally argued that it was a crisis that people would become elderly and still need to work to pay for their expenses. A typical statistic quoted would be that 64% of people are not prepared for retirement. Flipping this around, this means that 36% of people are prepared for retirement and some are in a position for early retirement. The typical target ages are 65-70 for an on-schedule retirement. If people are 20-25 when they start serious careers then they are achieving a comfortable retirement in 35 to 50 years through work, savings and investment.

Many European countries have high rates of people successfully reaching retirement or a work optional state. The savings rate can be higher and the medical system and elder care systems can be nationally structured where there is never the risk of large financial payouts for any medical procedure or for elder care costs where the nursing costs are paid for by the elderly or their families.

36% of Japan’s population is projected to be over the age of 65 by 2050 and 48% over the age of 55 by 2050.

About 25% of people in the USA have voluntary early retirement before the age of 62.

Over 4.5 million people have followed a trend toward living without debt. Radio host Dave Ramsey promotes a simple approach to budgeting and choices to enable even people with low incomes to pay off all of their debts.

38% of Millenials are saving for retirement. This is higher than previous generations. There is a trend for better investment knowledge and more aggressive savings and investment.

Retail investors have had below-average market returns. They have typically been getting 5.19% annual returns instead of the 9.85% annual returns of the SP500.

The Millenial investment trend, mass financial education, and more optimal structuring of national medical systems and pension systems would enable the vast majority of people to reach financially secure retirement at the age of 60.

People are living healthy and active lives for 15-20 years after the age of 65. Asian American Women in New Jersey have a life expectancy of 93 years. People living healthy and active lives up to 100 within thirty years seems assured with just moderate success with antiaging science and medicine. The other factor would be that the following generation of families after the first generation reaches financial security would have a financial boost. Financially secure parents would be able to provide initial down payment for a property or other assistance.

This would mean most people working from 20-60 and then being in a work optional retirement from 60-100.

Any improvements in financial management, investments, antiaging would boost the number of people in a work optional, financially secure state beyond 50%.

Asia is catching up to America, Japan and Europe in per capita wealth. Longer-term after 2050, the world would be trending from 15% comfortably retired or early retired towards 50% possibly as early as 2100. The definition of early retired and having over half of one’s life optionally working would expand with longevity improvement.

SOURCES – Ramsey, Schroders, Wikipedia, The Balance
Written By Brian Wang, Nextbigfuture.com

31 thoughts on “A World With Most in a Work Optional State”

  1. The statement I keyed in on is this, "Where there is never the risk of large financial payouts for any medical procedure or for elder care costs…" What isn't said, is what type of 'state medical care' will you be receiving? And what type of 'assisted care' will you be receiving. I've had some experience with those supposedly stellar European socialist models, and they are a nightmare! In Sweden, women have to drive across the country for a Mammogram, and they've hired a special police force to handle waiting rooms because of the absurdly long waits – some up to 8 and 9 hours! In Britain, patients are known to regularly die waiting for procedures, and a few years ago, one patient died of thirst in a hospital bed. They just forgot about her. So, you work hard, pay off your home, sell it, and move into tiny house that you will own. You will then have a pile of cash to cover good medical and stellar assisted care. No crappy socialism. Problem solved.

  2. The long term trend for production is heading down the same path as agriculture. More and more production needing the involvement of fewer and fewer warm bodies. No need to worry about demographics.

  3. When I was a kid the standard of living was lower. We didn't have air conditioning, and had one TV. When my parents were kids they has like 8 siblings all living in a tiny house. The standard of living tends to rise.

    Optional work sounds great until those with the option choose to work. Their standard of living will rise while the ones who choose not to work will remain flat.
    In a few years, this could easily be considered "poverty". Sure it sounds great now for two people to own a 3 bedroom house and two cars, but in the future this might be as nothing.

    100 years ago if 10 people owned a 3 bedroom house and one car they were living it up. After all, that's way better than what their parents had. Today we would say they're "struggling".

    If prosperity rises so much that work becomes optional, then maybe the standard would be for two people to own a 5 bedroom super mini McMansion with three flying cars and a timeshare on an industrial drone. Your 3 bedroom normie house and two land-based cars sounds pretty lame in comparison.

    If people can work they should work. This is productivity. Simple as that.

  4. Food is cheaper than it's ever been, so that's not an issue. People might spend more, but that's because they want a fully prepared meal with 4 different out-of-season vegetables, elaborate preparation, and someone else to do all the work.
    Like for like, a loaf of bread or a sack of beans is super cheap by historical standards.

    Housing is a positional good. A house is cheap. But if you want it in the nice suburbs in the middle of a growing and popular city then 1 million other people also want it and you are bidding against them. To make this cheaper you have to get rid of all the other buyers somehow.

    Healthcare is not ever going to be cheap. If you want the health care standard of 1960 it is very cheap. But nobody wants that. Even if they did, it is illegal to give someone such substandard medical care. Health care is a necessity with an unlimited price tag. Every year something new is developed, and it rapidly becomes socially accepted that this is the minimum acceptable standard, even when it costs half a million dollars. The only way to stop this is to ban medical research and tell everyone who isn't cured already to suck it up.

    Education is a combination. Videos on youtube and free-to-trivial-cost on-line sources provide a huge range of education for effectively nothing but your time and effort. Ivy league degrees are positional. And no-name brand colleges are a combination of ever increasing added fripperies, combined with some good value and outdated tech

  5. Technology will reduce the number of people to produce any product. I think that reducing the full time hours worked to 28 per week will cause job sharing. Reducing unemployment will help. The next thing is to fix the cost of housing, food, medical, and education. If we structure all our costs and provide a livable wage with planning for retirement at 60 its all good.

  6. Interesting, how do you see existing deficit spending levels and debt service requirements impacting the capability for governments to provide UBI? Will UBI be delayed until governments are solvent, will they print more fiat money – courting inflation and devaluation of the UBI, or will they confiscate assets via taxes to redistribute – partially removing incentives for growth, innovation and modernization?

  7. Some people take to retirement, others just don't want to retire. I was happy at work. And when the company I had worked for closed down when I was 62 I could have easily retired but I still found work because I liked to work. I only stopped working at the age of 69 because of a major crises and drastic changes in my life. 4 years later I am reasonably happy again, but quite honestly I was happy working.
    I know there are a lot of guys my age out there who miss work.
    And I also knew quite a number of people who did not have any obvious health problems but died within 5 years after retirement, maybe because they just felt not useful any more.
    There are a lot of people protesting against the Covid restrictions in different parts of the world. I think a good percentage of them actually protest because they can not work.

  8. 0.5 kids is an extinction event…. eventually.

    That's the population falling by 80% per generation. Say every 30 years. With good prospects of youth extension maybe every 50 years or more.

    If we start with 8 billion, that's down to 320 million people after 100 years.

    I'm going to go out on a limb and suggest that culture in a world 100 years in the future with a world population of 320 million is going to be radically different to our own. I'm talking like comparing our own culture to that of the Regency England of Jane Austen.

    At which point the "brief fad for not having Children that occured at the end of the 20th century" is going to be as relevant as "the brief fad for men to wear long curly wigs made white with powder at the end of the 18th century".

  9. I'm intrigued by your maths.

    Unless you're a perennially single, often-unemployed, uninvested, unhealthy, without family inheritances, life-renter in the bottom 25% of income levels during your entire working life, and are unable to save at least 5% of your net income for at least 10 – 15 years, it takes a huge effort (non-effort) to not be able to exist on the $500 rent levels

    OK, we can look at the numbers.

    1. Above the bottom 25%. Let's say person A (we'll call her Abby) is way above that point at the 50% point. Yearly income = $63k
    2. Saves 5% of income = $3150/year
    3. For 10-15 years. We'll go with 15 = $47,250.
    4. Can earn $500 rent. I assume that's $500/month, because $500/week is not what you would go for if you're trying to stretch out that retirement fund.

    So that's $6000/year. 13% return on your money. Just for rent. Good luck with that.

    We could of course say that 7% is a much more reasonable return if you go all in on the stock market and don't invest at the peak of a boom. And if you invest $47,250 at 7% it'll double in 10 years, and now your 7% will cover your rent.
    If you wait another 10 years you double again, now you're earning $12000/year, $1000 a month. Half on rent, half on food, clothes… yeah you can live on that.
    But we've blown way past the minimum 10 years. On to a multi-decade working life. For a minimum lifestyle.
    Better hope you never get sick, buy a car, or have a bear market.

  10. Do you really think that our problem is going to be that everyone will be too educated and highly skilled?

    Oh, and I knew a guy who worked on a road work site holding a stop/go sign. He was on $36/hour and this was 10 years ago.

  11. It's like when people were panicking about both the world being about to run out of oil AND global warming from too many cars and aeroplanes.

  12. "Soon we are down to 0.5 kids per fertile woman

    What then are the resources needed in society to support such as lifestyle, once widespread?"

    Wow, it's pretty impressive seeing somebody discuss human extinction that casually.

    Because at 0.5 kids per fertile woman, that's what you're describing: Human extinction. Takes about 2.1 just to keep the population stable, at 0.5 you'd be looking at an extinction event.

  13. AI, Advanced Automation and Robotics will took off this decade and make world extremely productive and rich in short amount of time. Some kind of UBI will be introduced worldwide. Productivity will be so high that this UBI in around 2040-2050 will easily guarantee everyone above 18 standard of living of todays upper middle class.

    Tech (depending on category) will be 10's to millions(computing, AI) of times more advanced in near future, so even buying cheap stuff in future, quality of it will be so high (compared to today) that for example cheapest car in 2040-50 would cost
    100 000's if not millions of dollars today.

    Some "poor" people doing nothing (maybe creating data by their activity) will be able to 3d print(using 1000x more advanced 3d printers or other method of production) super cheaply,cars like let's say Ferrari 458 for few thousands of $. Basically cost of raw materials and few hundred of $ for the design for Ferrari for this ancient model. The same with house construction and many high quality gadgets

    Being below 40 today and seeing tech trends and tech acceleration I wouldn't worry about saving for retirement, everyone above 18 will get decent UBI, which will be probably increased each year, proportionally to increased productivity and after 2030 it will grow like crazy. I wouldn't be surprised if in 2040's people in most developed countries will be getting above $10k per month due to level of AI, Automation and robotics sophistication.

  14. It's interesting that lots of countries have shrinking demographies – with far fewer young to produce goods and services needed to support those in retirement…
    … but simultaneously we are worrying that automation is going to take away lots of jobs.

  15. It's not so different from planting an orchard of fruit trees that takes many years to mature.

    The economy could have wasted its time giving them short term consumer goods when they were young, but they chose to sacrifice and plant that seed money instead of consuming it. That allowed the economy to direct more human economic efforts into capital – growing businesses, R&D, infrastructure, etc. The effects of that investment grew over time. Now their financial fruit trees are mature and they can continuously harvest.

    It is a bit weird to think of this in terms of extreme longevity. We want people to invest capital to grow our economic futures. It's fair for that to be rewarded – the economy they harvest later wouldn't exist if they hadn't invested, so they really do own it. But to the people still working, they will look a lot like fat useless nobles. Those workers would be more impoverished if those nobles hadn't once sacrificed though.

  16. Kudos to your friends. I for one am proud of them. I do have to admit though, if you are creating nothing real in the economy you are just rent seeking. I get that they are using their scarce hard saved capital to allocate resources to something possibly productive. But really they are retired doing nothing. Some one is growing their food, trucking it for them, taking their trash to dump, etc, etc. And they are presumably relaxing and hanging out. Seems like a very nice niche in the economic history of the world. Previously I suppose we would call them a Prince or a king living off the labor of the serfs. I do acknowledge they worked and saved for the fiefdom versus a birth right nobility.

  17. Agree, the federal reserve has artificially raised the price of housing, and financial assets. It's a bubble, a huge intentionally blown bubble.
    The petrodollar will collapse, and the US will have to start earning it's own way, like it did before WW2.

  18. So, it sounds like you are raising your kids as a responsible adult. This is great. Were do garbage men, janitors, road construction workers play into your game? We still need all of those and we aren't going to pay them the current equivalent of $35/hour now or or in the future.

  19. The money supply has quadrupled since 2000. I think you and your up votes have hit on the big lie that most people believe currently. Why wouldn't the stock market and house value increase? We have 0% interest rates and 4 times the amount of dollars than 20 years ago. Your house didn't quadruple in value since 2000 but there are hypothetically 4 times as many dollars that could purchase it. We literally dropped $1 Trillion dollars of hot helicopter money onto the economy last week. So ask yourself, did we magically create a extra $1 trillion worth of real economic growth or did we debase some people? https://fred.stlouisfed.org/series/M2SL

  20. Is income more useful?

    Income(2016 Dollars)
    2021(cbo projections)

    Quintile 2016 2021
    Lowest 20,600 21,900
    Second 45,300 47,900
    Middle 72,500 76,700
    Fourth 109,600 116,100
    Highest 291,200 319,400

  21. I have two friends who have literally been saving since first grade, and now their only job is managing their portfoliis. I'm super jealous. They're not even 40 and they just manage their money and give each other financial growth challenges and do whatever the heck they want, most of the time.

  22. Sounds to me that we need to focus on getting our children invested in the economy at the earliest age possible and let time/compound interest do the heavy lifting. I am doing that with my 3yo and 1yo's, for this among other reasons.
    We need to make sure, at a minimum, that they also have the skills/licenses/certifications to make sure they are not flipping burgers after high school. That changes life trajectories, making $35 an hour instead of $12 an hour in their late teens even if they never go to college.
    By focusing our attention on starting the life process young as children everything becomes easier to hit the same goals than starting much later IMO. I am following my own advice with my children for what it is worth.

  23. 'net worth'? varying usefulness depending on whether you have owned housing, dependents, time before retirement, etc.

  24. not convinced.
    housing value has increased by 3 – 8%+ annually for decades in at least minimumly valuable neighborhoods, with most people not accessing their equity in that time.
    the major stock indices have increased by 3 – 10%+ annually for decades.
    US unemployment has averaged less that 6% since WW2 with extremes of 2% to 15% in isolated years.
    Unless you're a perennially single, often-unemployed, uninvested, unhealthy, without family inheritances, life-renter in the bottom 25% of income levels during your entire working life, and are unable to save at least 5% of your net income for at least 10 – 15 years, it takes a huge effort (non-effort) to not be able to exist on the $500 rent levels (before subsidies, old Age, etc) that are available in all but the top 10 biggest cities, for 10 – 20 years.
    near-impossible to need to work in the last 10 years of your life in a G7 country.

  25. I officially retired from Boeing, but still do the same kind of engineering work, because I enjoy it. But now it is part-time from a home office. No commute and flexible hours is a huge improvement from my standpoint.

  26. I'm afraid most financial assets, and government "entitlements" will be greatly devalued in a coming inflationary depression, even if their nominal value is increased. BTW, that includes social security, medicare/medicaid, and most, if not all private, and government defined benefit pension programs.
    Unless there is a return of manufacturing, such as factories to the US, retirement will be impossible for most people. Goods will have to be imported at high cost as the dollar loses value, and it's world reserve status comes to an end.

  27. Most people working from 20-60 simply will not be in a work optional retirement, but reality gives them little choice in the matter. Without socialism(social security, medicare etc) and after the first few years, many will be retiring to the nearest landfill for their daily bread.

    The bottom 3 quintiles represent 60% of Americans over 17 years, business as usual will produce the usual results.

    Quintile Median Net Worth (2000) Change by 2017
    Bottom $4,825 -1.9%
    Next $24,284 +43.9%
    Middle $58,226 +37.6%

  28. depends on demographics. Soon we are down to 0.5 kids per fertile woman — are we starting work later/ earlier? Taking on less careers and more bit- and gig- work? Are we starting our careers right after our 16-yr-old HS grad+4-yr college — or embracing non-traditional paths of experience/ knowledge. With 80 – 100 year health-spans likely after 2050 are we doing our 30-40 year Work commitment from 25 – 65 or 45 – 85? With multiple generational family living arrangements in flux around the world – are fewer working? more family businesses? more family-internalized skills and less use of community resources? Point: unlikely 9a – 5p, 40 years, 22 – 62yr then retire for 10 – 15yrs healthy and 2 – 5yrs supported, going forward. What then are the resources needed in society to support such as lifestyle, once widepsread?

  29. Not convinced that our view of retirement past the 2030s will be the same as those of previous generations (i.e. work your a$s of for 25 – 40 years, just so you can run out the clock for the remaining 5 – 20 years without mortgage, 40+ work weeks, and the obvious loss of productivity/ drive (age) which made working less enjoyable). I see more blended semi-retirements, selective consulting, occasional sabbaticals in the last 5 – 15 years of full-time career, non-work income source prioritization (i know a lot of older 45+ day traders), upgraded gig working (i.e. Amazon Turk gone Professional), and just an earlier transition away from 'rat race'.

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