I've been thinking quite a bit recently about our concept of "old age." There's a stigma attached to aging today that originates from century-old thoughts and realities. This negative connotation stems from the idea that you're "old" once you hit full retirement age as defined by the Social Security Administration. I'm here to tell you, this idea is no longer valid nor true.
The notion of a “typical retirement age” was shaped back in 1905, when physician William Osler called for those 60 and older to leave work. He declared such people brought diminished value to the workplace. Later, in 1935, President Franklin D. Roosevelt signed the Social Security Act into law, which created continuing benefits for those 65 and older. It is thought that this retirement age was selected, in part, thanks to Osler’s claims.
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Social Security benefits are an essential financial safety net for retirees. People depend on it no matter their income level. It's an additional income stream during your Golden Years, and for decades, this monthly check has helped retirees meet or supplement their post-career financial needs.
But let me tell you what you already know — we are not the same society that we were 100 years ago.
Today, we are living longer than ever, thanks to improvements in medicine and technology, health education, and environmental factors like housing and water purity.
Take a look at average lifespans from the SSA's website. There you'll find data that shows men who turn 65 this year are expected to live to age 84.0, while women are expected to live to age 86.5. That's a lot longer than back in 1935, when the average life expectancy was only 58 for men and 62 for women.
Of course, those numbers are just averages. About 1 out of every 3 of today’s 65-year-olds will live past age 90, and 1 out of 7 will live past age 95. So, it’s not uncommon to see people thriving for another three decades after retirement.
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I think it's important to consider the history of how and why Social Security was created to understand better how we've gotten to where we are now. Plus, it's a fascinating story.
Today, Social Security benefits provide a nice financial cushion for your retirement years. But, of course, it wasn’t always that way.
Before Social Security came about, for almost 250 years — since Colonial times, on the frontier, and until the late 1890s — families made their own living and their own way. These generations were self-reliant. They lived off the land, tended to livestock and grew their own food. When they needed something, most of the time, they made it themselves. When one family member grew old and could no longer participate in the work, the other family members cared for them.
But then, in the late 19th century and the early 20th century, the Industrial Revolution happened, and the American landscape changed dramatically.
Perhaps the most significant upheaval came by way of the massive migration of people from farms to the cities. These farmhands took jobs in manufacturing and building jobs, while women took up work as clerks, cashiers and stenographers.
America’s industrialization changed what retirement was like before Social Security in that it changed the way that people secured their lives. Instead of making their living, they were now earning their living through paid jobs. With increased manufacturing came an increased availability of goods for purchase, and factories continually needed more employees to make the goods.
It was now easier to buy goods than to make them, and rural folks flocked to the city to work for wages.
As a result of this migration, multigenerational households became fewer and fewer, and older individuals were left to fend for themselves. Plus, instead of stockpiling the meager amounts of money farm families had in a safe or under a mattress, the workers of the industrial age began to invest in the stock market.
Enter the 1920s. The Great Depression struck, and in its wake, there was tremendous suffering for millions of people across the country. No longer could workers depend on employers to provide steady employment. And for the older generations, they saw their savings disappear. Again, they became dependent on their children or other family for help. But these individuals had their own burdens and often couldn’t help their aging parents, grandparents, aunts or uncles.
When Roosevelt was elected in 1932, there was a clear need for a social assistance program for retirees. People were desperate; they wrote directly to the president and other politicians of their bleak circumstances. These letters came in by the thousands from the elderly across the country. The older generations were crying out for basic living necessities, like food, medical care and shelter.
President Roosevelt rose to that daunting challenge. Social insurance addressed the enduring problem of economic security for older Americans. His program created the work-related, contributory system that we know today, in which workers provide for their own future financial security through the payment of employment taxes.
And so, the Social Security program as we know it today was born, adopted into law in 1935.
Upon this historic occasion, Roosevelt said, “We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.”
This history provides us with two reminders. One is that we shouldn't take our monthly checks for granted, even if it is just an additional income stream we can count on every month. The second is that age 65 is by no means "old." So, when you're ready to apply for your Social Security benefits, whether at age 62 or 70, keep this fact in mind. You likely have years — heck, decades — to spend in this new phase of life. My advice is to get out there and make the most of it, and above all, be happy.
Wes Moss has been the host of “Money Matters” on News 95.5 and AM 750 WSB in Atlanta for more than seven years now, and he does a live show from 9-11 a.m. Sundays. He is the chief investment strategist for Atlanta-based Capital Investment Advisors. For more information, go to wesmoss.com.
DISCLOSURE
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