If you’re someone that has planned for retirement diligently or someone that is nearing retirement, then you’ve likely noticed the ways in which retirement has changed since its beginning. The companies we work for today are nothing like the first companies of American history, and their retirement plans are no different. The first companies in America were small business that were run by families. Since then, pension plans were created, corporations were built, and the 401k plan was established. Over the past 40 years, retirement has taken on drastic changes. These changes haven’t exactly been in favor of the retiree. Here’s a list of three major differences between retirement in the good ol’ days and the retirement we know in the world today.


Difference #1: Social Security

Back in 1985, retirees relied heavily on Social Security to get them through their retirement years. Luckily for them, Social Security actually sufficiently supported retirees then. 30 years ago, retirees could almost live on their Social Security benefits alone. Not so today. Currently, Social Security benefits account for only 27% of retirement income, which pales in comparison to 67% in 1985. Today, retirees can’t afford to rely on social security to pay for even half of the income they will need in retirement. Social Security today is meant to be supplemental income, not your sole retirement income. Unfortunately, 45% of current retirees still rely heavily on their Social Security benefits, only to find that this income is never enough.

Difference #2: 401k v. Pension

Pensions are a defined benefit plan that pays monthly fixed amounts, allowing a retiree to easily budget their income and plan for a guaranteed amount of money each month. They were originally designed for employees who had been with the company at least 20 years, had reached age 60, and had been approved for retirement by the company’s board of directors. the first corporate pension in the U.S. was created by the American Express Company in 1875, and from there pensions grew tremendously. By 1930, you could find pension plans at the majority of large corporations, including Goodyear, Kodak, General Electric, and AT&T.

Retirees today are considered very lucky if they have a pension funding their retirement. Presently, only a few industries might still offer pension plans for full-time workers – military, government, and teaching being a few. Most companies have ditched the defined benefits plan for a defined contributions play – the keyword is contributions. These contributions are no longer made by the company, but the beneficiary. Today, retirees don’t benefit from a plan that was made for them, but rather one that they made the bulk of contributions to and directed the investments for. The switch from pensions to 401k-style accounts started back in 1980 and has been embraced by more and more companies ever since. “Retirement has taken a back seat to corporate profitability for more than 40 years as the United States has embraced the reduction of pensions” (USA Today). The switch from pension plans to 401k-like plans has been disastrous for a lot of Americans. Needless to say, this change in retirement has been a very influential one.

Difference #3: Life-Span

In 1985, men were only expected to live a mere 14 years after they retire at age 65 (79). Women have always lived longer than men, so naturally, they were expected to live 19 years after retiring (84). Today, the number of years men and women are expected to live after retirement has almost doubled – 26 years for men and 29 years for women. This means that retirement income needs to last much longer than it did back in the ’80s. Retirees now have to come up with enough retirement income to last them for almost 30 years! That’s almost like funding the entire span of your working career. It’s no wonder that the biggest fear retirees today have for retirement is running out of money. Retirees fear running out of money more than they fear death! Unfortunately, retirement has become a very scary endeavor for a lot of folks.


As displayed above, retirement has changed dramatically, and we’ve only listed a few of the numerous changes that have occurred over the past 40 years. Fortunately, Ark Financial is here to help you build a retirement plan that you won’t outlive. Contact us today for a consultation!