November – 2005 Retiring retirement

A few years ago on an organised trip to Palm Springs I skipped out of the scheduled itinerary for a day to drive over to an address in Claremont. It was a fairly nondescript house on a modest estate. I was half an hour early and the elderly man who came to the door seemed a little irritated that I had arrived ahead of time.

He was Peter Drucker, the management writer, who died just over a week ago, aged 95. Drucker was in his late 80s at that time. I wasn’t expecting anything remarkable from the interview. If I’m honest the visit was something of a pilgrimage. I just wanted to see him.

Drucker was businesslike at first and pointed out he was “squeezing” me in to his work routine before settling in to an easy wide-ranging conversation that lasted the morning. In the same way, a year or two later I flew over to Connecticut to meet Joseph Juran, the quality guru, now aged over 100, who was busy writing his memoirs. One thing that both of these men had in common is that they were still working. Retirement held no meaning for them.

I thought about Drucker when the FT revealed last week that Lord Adair Turner’s Pensions Commission would be recommending that the age at which people employed in the UK can claim their full state pension should rise from 65 to 67. At the same time it will suggest a new national pension savings plan in to which people will be enrolled when they start a job.

Much of the subsequent news coverage suggested that many people would need to work longer in order to finance their retirement. This is almost universally portrayed as a bad thing in the not unreasonable assumption that most people look forward to retirement.

But does this assumption need to change? I do wonder whether we have become conditioned to the idea of retirement and whether it is time to radically adjust the way we live and work in to old age. The first step in this adjustment is to end the link between pensions and retirement. Pensions should be seen as nothing more or less than tax efficient savings plans that enable the purchase of an annuity - the longevity bet that you make with an insurer - at some stage in order to provide a regular chunk of income in old age.

Retirement, it should be remembered, is a relatively recent concept, not more than about 200 years old. In pre-industrial economies when life expectancy was much shorter so was the time between the end of working life and death.

In my own life the concept of what constitutes active retirement has changed. No longer is it spending more time at the club or digging over the vegetable patch. Today the retired middle classes have become serial travellers and mass consumers of pharmaceuticals. I don’t begrudge people the opportunity to take life more easily. But I do think that the long tail from formal retirement to death could be better managed, both economically and socially.

I have never understood the formal retirement ceremony where people go in to work one day, say their goodbyes, make their speech, then listen to all the plaudits, only to find themselves the very next day sitting in an armchair wondering how to fill the next 20 or 30 years.

A lifecycle is not like a product cycle. Shakespeare wrote about the seven ages but the relationship between age, knowledge, learning and the contribution we can make to the world is a complex continuum that does not fit in to neat boxes. And yet our lives continue to be organised as a series of inter-linked packages when the packages are no longer elastic enough to mould themselves around a growing variety of lifestyle and workstyle choices.

To get rid of retirement we will probably need to get rid of careers too, or at least the career ladder. The ladder has changed anyway. Today it resembles more of a rock-strewn salmon leap than the multi-runged straight-lined climb. Some are moving through their executive careers at such a rate of knots they are out the other side in young middle age. That’s fine for those capable of adapting to a less structured way of life. But some people struggle.

I have reached the age now where most of my oldest friends are in their early 50s and late 40s. I can’t think of one who is thinking about retirement as an end to their working life. Instead they are thinking of what to do next.

One friend at 60 is still playing regularly in the back row of his local rugby team. This is a league side not a veterans side and he earns his place on merit. He does not discuss his age. “It’s irrelevant,” he says.

Another friend who has spent his entire career at a large blue chip company is hoping to work on Britain’s preparations for the 2012 Olympic Games. “That would be a seven year project that would take me to 59 doing something I really want to do,” he says.

Their attitude is not shaped by a need to see their time out, but about what to do next. This is the only way, now, to think about later life; not as retirement, but as the next project. The pension, for these people, may be seen as an important income supplement but not, with luck, their entire income.

But employers must adapt to exploit and encourage these changing attitudes. The biggest employers are facing the biggest problems here because retirement is a part of their institutional framework informing expectations on both sides of the contract. Too many employees have become trapped by their pension promises, committing themselves to work they no longer find intrinsically rewarding, harbouring a rosy vision of retirement that does not always live up to its promise.

The government is right to concentrate on savings. But the lending institutions have widely ignored this need, preferring to encourage debt, leaving people trapped servicing mortgages that can only be maintained if their earnings continue to rise. Debt is the enemy of flexibility and flexibility is the key to successful work-related adaptation across a lifetime.

Later working is too often perceived as a necessary substitute to retirement when it should be a desirable alternative, a fulfilling constituent of later living that can not be conceived in the same way as the hell-for-leather pace that some choose to adopt in their thirties.

Peter Drucker was his own man who left a rich legacy of teaching for corporate management that remains fresh today. But the way he lived and worked is an equally rich example for the fulfilled life.