What if everyone ER'd?

[kyounge1956]

I am reading a book on goal setting. One of the questions they suggest to examine personal goals is "What if everyone had the same goal I do?"

Leaving aside for the moment the question of whether one should base one's own actions on what everyone else would do—especially in a case like ER where it's extremely unlikely that they will—what would happen if everybody ER'd?

For a hypothetical situation to discuss, let's suppose that on average, people were economically self-supporting by age 25 (i.e. moved out of parental abode, college loans if any paid off etc), and then saved enough of their income for 30 years to support themselves for another 30 years sans job. What would be the economic, political & social effects if ER were the rule rather than the exception?

 

[Frugality_of_Apathy]

There'd be much less unemployment in the younger generations and there would be a much bigger service industry. You'd probably see more more volunteer work being done.

 

[Notmuchlonger]

I am reading a book on goal setting. One of the questions they suggest to examine personal goals is "What if everyone had the same goal I do?"

Leaving aside for the moment the question of whether one should base one's own actions on what everyone else would do—especially in a case like ER where it's extremely unlikely that they will—what would happen if everybody ER'd?

For a hypothetical situation to discuss, let's suppose that on average, people were economically self-supporting by age 25 (i.e. moved out of parental abode, college loans if any paid off etc), and then saved enough of their income for 30 years to support themselves for another 30 years sans job. What would be the economic, political & social effects if ER were the rule rather than the exception?

You have some kind of utopia I guess. Since everyone would have to think and produce at the same rate. I guess it could happen in some kind of clone society. Almost robotic like.

 

[Grep]

We would all sit around a campfire and sing "Imagine", and then ominously threaten a slow and very painful death to the unfortunate person who first suggests "Kumbia" (or however that's spelled).

 

[plex]

Throwing in the additional assumption that all needs are provided by robots that are serviced/upgraded by just a few humans, instead of by 3rd world countries...

I would guess there would be a huge amount of social programs, in order to provide structure for many of the people who really just need it in order to operate. There would also obviously be a lot more recreation. I imagine encouraging physical activity would be a pretty big issue, considering how easy it would be to just sit around.

For many here, I think it would be a utopia, for others, perhaps not so much so, I think there is a segment of the population that would create work just for the sake of having work to do.

 

[Nords]

What if everyone ER'd?

Here's a blast from the past:
http://www.early-retirement.org/for...g-make-things-better-for-everybody-17085.html

 

[eridanus]

Jobs would become a lot more flexible.

 

[RonBoyd]

Imagine how much fun this board would be then.

 

[youbet]

In Chicago, all the "civil servents" have retired early. Of course, they're still on payroll..... but very much retired nonetheless!

 

[Rambler]

No worries about this happening. I was just having an interview with a reporter from the local business rag about employment and labor regulations. In the discussion he elaborated about how many people there are who expect society to take care of them, and have no thoughts about creating their own career/job security. There are too many people who can't stick to their goals, let alone set goals, let alone even know what a goal is, for something like OP's notion to ever happen.

R

 

[CuppaJoe]

What am I missing here? Isn't getting Thirty (30!) years w*rk out of every adult enough? What more could "society" possibly want. Blood? Or do they get that from volunteers?

 

[old woman]

If you worked 30 years from 25 then retired 30 years you would only be 85 when you ran out of money. You would end up with old people who hadn't worked in 30 years having to try to land a job. The life expectancy of a 70 year old is 27.5 years, one of a couple of retired people can expect to live past 90.

Also you are assuming all adults start working at 25 when many are still in school or raising children. My mom worked until she was 19 then took 20 years out to raise kids then worked 20 and has been retired 22. Working 30 years before 55 doesn't always happen with illness, unemployment, accidents and being caregivers to others. It is a nice goal but really only would work for people who didn't have anything else going on and who planned to die young.

 

[W2R]

I think that some of the social effects would be very positive. If everyone was retired for 30 years, I think there would be a lot more volunteers than we have today. Nursing home residents would not feel lonely and isolated; children would never lack for someone to read to them or tutor them, and hospital patients would always have someone cheerful and empathetic who would visit, bring books, and hold their hands. Parks would be beautiful due to volunteers planting flowers and beautifying.

 

[Independent]

... what would happen if everybody ER'd?

For a hypothetical situation to discuss, let's suppose that on average, people were economically self-supporting by age 25 (i.e. moved out of parental abode, college loans if any paid off etc), and then saved enough of their income for 30 years to support themselves for another 30 years sans job. What would be the economic, political & social effects if ER were the rule rather than the exception?

I think the cause-effect question goes in the other direction. "What changes in economic, political, and social conditions would be required before people would be comfortable retiring half way through their adult lives?"

My answer is: A huge change in the relative value we put on stuff-you-can-buy vs. free time. This would be a society where hardly anybody wants a 2,000 sq ft house, a 4,000 pound car, or a Caribbean cruise. We'd all prefer the simple lifestyle - grow your own vegetables, cook your own meals.

If our society started going in that direction, the increase in capital (from all the saving) and decrease in labor (from all the retiring) would increase wages and decrease returns on capital. This would make it even harder to save for retirement and easier to justify "just one more year" in the labor market. So the change in attitudes would need to be huge.

Not to say that we couldn't move in this direction. I've heard that, on average, Europeans thoughtfully decide they'd rather have more free time and less material wealth than the average American. (someone who has lived there might want to weigh in).

 

[kyounge1956]

If you worked 30 years from 25 then retired 30 years you would only be 85 when you ran out of money. You would end up with old people who hadn't worked in 30 years having to try to land a job. The life expectancy of a 70 year old is 27.5 years, one of a couple of retired people can expect to live past 90.

Also you are assuming all adults start working at 25 when many are still in school or raising children. My mom worked until she was 19 then took 20 years out to raise kids then worked 20 and has been retired 22. Working 30 years before 55 doesn't always happen with illness, unemployment, accidents and being caregivers to others. It is a nice goal but really only would work for people who didn't have anything else going on and who planned to die young.

True, some adults are still in school at age 25, others may start careers in industry or the military straight out of high school. I suggested the numbers 25 (age) +30 (job) + 30 (ER) based on what I remembered of life expectancy figures. I just checked again on Wikipedia, and a baby born last year in the U.S. has an estimated life expectancy between 77.5 and 80 years. Canada, Australia, and western Europe are similar.
The picture I wanted to paint was of people typically being retired for about half of their adult life. If you want to think of this as 30 + 30 + 30, or 25 + 35 + 35, go right ahead! It's a hypothetical situation, remember.

 

[freebird5825]

What am I missing here? Isn't getting Thirty (30!) years w*rk out of every adult enough? What more could "society" possibly want. Blood? Or do they get that from volunteers?

I hear ya. I burned out after 30 yrs of full time. Add on PT j*bs after school, and I'll score a 33. No wonder I'm so tired.
The sad part is the answer to "what society wants" is more like 44 years. Assumptions for that figure are: (1) a person's 1st full time job occurs at 18 after HS graduation, and (2) the person retires at age 62, minimum age for SS.
Some start sooner, some retire later.

 

[FUEGO]

Interesting question, and pardon me for being skeptical that it would ever happen. If productivity growth continues its long technology driven upward trend to the moon, I suppose it could happen in some form eventually. If we sustain an average productivity growth of 1% per year, our output per hour of labor will double in 70 years. Similarly, a 2% per year increase in productivity will double our output per labor hour in only 35 years.

Depending on the long term rate of productivity growth, we could be 2-4 times as productive in the span of a lifetime, I suppose meaning that if we held the standard of living constant, then all of us would only have to work 25-50% as much as we do now. Or instead of 30 years of working, maybe 10-15 years on average.

In reality, I think the standard of living will continue to increase to keep pace with increases in productivity. So most will work as hard and as long (albeit more efficiently) to accommodate a higher standard of living.

If you want to jump in a time machine to see what I mean, go back 100 years to 1909. The concept of ER was completely alien to the great unwashed masses of the middle and lower classes. Productivity was much lower, so the average worker didn't have enough of a surplus left at the end of the week to save and invest sufficiently to grow independently wealthy. Today, it is much easier to live below your means and save a significant portion of one's paycheck without deprivation in many (not all) careers.

There is also a question of the dynamic labor market. If supply of labor shrinks significantly, then the labor price will shoot up. At some point, there will be those ER's who are enticed back into the labor pool by sufficiently high wage rates. Everyone has a price. I'm sure there are many ER's right now that would jump back into it for double or triple their old salaries if offered the opportunity.

 

[ziggy29]

(1) a person's 1st full time job occurs at 18 after HS graduation, and (2) the person retires at age 62, minimum age for SS.

Except that someone starting a full-time j*b at 18 won't be in college and thus is far less likely to be able to have the income to put away for early retirement. Though I guess those who go into the military right after high school and put in their 20+ would be an exception.

 

[ziggy29]

If you want to jump in a time machine to see what I mean, go back 100 years to 1909. The concept of ER was completely alien to the great unwashed masses of the middle and lower classes. Productivity was much lower, so the average worker didn't have enough of a surplus left at the end of the week to save and invest sufficiently to grow independently wealthy. Today, it is much easier to live below your means and save a significant portion of one's paycheck without deprivation in many (not all) careers.

Well, if you think of so many of the increases in affluence and lifestyle changes -- wages outpacing inflation, pensions, suburbia, nuclear family living and yes, middle-class retirement as an expectation -- they all came of age in the times of plenty and the post-WW2 economic prosperity bubble.

One by one each of these seems to be going away as we face the painful reality that it's no longer possible to keep taking prosperity from future generations to avoid facing the music ourselves. And specifically for retirement, as defined contribution plans go into the toilet and defined benefit plans are increasingly unaffordable (and likely to come under increased scrutiny and attack), I don't think retirement will be a middle-class entitlement in another generation from today. I think it too was mostly a byproduct of the postwar bubble plus another 30+ years of keeping said bubble inflated with leverage and debt -- until it couldn't be inflated with debt to sustain it any more.

Those who plan early and save/invest until it hurts will probably still be able to retire in the future -- albeit not as early as we've seen over the last 30-40 years of retirees. And those in the middle class (and even upper middle class) who don't plan, who don't aggressively save for retirement, who don't have a gold-plated pension... I'm not sure retirement will be in the cards for them at ALL.

We'll muddle through it all, but I think the 20th century expectation that our kids will live better than we did is dead for a while. I don't think the economic rules or promises that governed the first few decades after WW2 are valid any more, and there's no way to mask it with credit and borrowed money any more.

 

[freebird5825]

Except that someone starting a full-time j*b at 18 won't be in college and thus is far less likely to be able to have the income to put away for early retirement. Though I guess those who go into the military right after high school and put in their 20+ would be an exception.

And those who w*rk PT while in college FT, or w*rk FT and attend college PT...it does happen.
I did the former for undergraduate, the latter for an unfinished master's degree.
I'll also guess that full time school AND a 40 hour w*rk week would be another exception.
But I will bet that someone here has done that!

 

[RonBoyd]

Except that someone starting a full-time j*b at 18 won't be in college and thus is far less likely to be able to have the income to put away for early retirement. Though I guess those who go into the military right after high school and put in their 20+ would be an exception.

I am more and more impressed with Kotlikoff and Burns' ability to cover all the bases. In their book (Spend Til' the End"), Chaper 10 -- Does College Really Pay -- starts with:

"The real question is not whether college grads earn more once they get work. The real question is can they achieve a higher living standard over their lifetimes given the costs of attending college"

and ends with

"There's more to college than just making money, of course. ...will have lots of fun and will, no doubt, make lifetime friends. ...also should learn a lot. But on pure economic grounds, going to college, at least an expensive one, is far less beneficial than most people believe."

 

[ziggy29]

Ron, I think that depends on what you study and where you go. I was accepted to some pretty prestigious private schools but I wound up going to a cheap state university which I was able to pay for in full by living at home and w*rking part time (mostly full-time during the summer and winter breaks) at a drug store.

So I got out of college with a job as a programmer -- and no student loan debt. Even when I was 18 I was being cheap and avoiding unnecessary debt...

 

[bbbamI]

What if everyone ER'd?

...and stopped working at age 55?

There would be no WallyWorld greeters!

 

[unclemick]

Hmmm - I turned out to be a slacker with a Curmudgeon certificate - but long long ago in a State far away, my Father( medical retired blue collar) got a Poly Sci degree from Portland State, went to PUD meetings and made detailed rebutal speeches against WHOOP's and once caused a city council to reconsider making the dog catcher an elective office by threatening to run on a dog's right's platform(no leash and the right to poop). Also was a photographer for the a college paper while attending.

heh heh heh - a world of slackers(ER's) sounds great. I shall do my part.

 

[kumquat]

I'll also guess that full time school AND a 40 hour w*rk week would be another exception.
But I will bet that someone here has done that!

Not me, but DD did a year of it.