%20(1).png)
%20(1).png)
Retirement, as a concept, has evolved significantly over the centuries. For much of history, the idea of retirement was virtually nonexistent. People worked until they could no longer do so, relying on family or charity in old age. It wasn't until the late 19th and early 20th centuries that formal retirement systems began to take shape, largely through the advent of pensions.
Originally published: September 19, 2024
The concept of a pension can be traced back to Roman times, where soldiers were granted pensions as a reward for their service. However, modern pensions began to emerge in the late 19th century with the establishment of state-sponsored pension schemes. One of the earliest examples was Germany's social insurance program, introduced by Chancellor Otto von Bismarck in 1889. This groundbreaking system provided financial support to workers who reached the age of 70 (later reduced to 65), marking a significant shift in how societies viewed retirement.
In the United States, the first pension plans were primarily offered by government employers and a few large corporations. The American Express Company established one of the first corporate pension plans in 1875. However, it wasn't until the passage of the Social Security Act in 1935 that pensions became more widespread. This landmark legislation provided a safety net for retired workers, ensuring they would have some income after leaving the workforce.
The period following World War II saw a substantial increase in the number of pension plans. The booming economy and the rise of powerful labor unions played a significant role in this expansion. Unions negotiated pension benefits as part of collective bargaining agreements, leading to the proliferation of employer-sponsored defined benefit (DB) pension plans. These plans promised workers a specific monthly benefit upon retirement, often based on salary and years of service.
By the mid-20th century, pensions had become a standard component of the American employment landscape. They provided workers with a sense of security, knowing they would receive a guaranteed income in retirement. This era is often viewed as the golden age of pensions, where the promise of a comfortable retirement was within reach for many American workers.
The rise of pensions transformed the concept of retirement, providing workers with a reliable source of income in their later years. These defined benefit plans, backed by employers and sometimes the government, became a cornerstone of retirement planning. However, as the economic landscape began to shift in the latter part of the 20th century, the sustainability of these pension plans came into question, leading to significant changes in retirement planning.
Continue reading: The History of Retirement Part 2: The Fall of Pensions and Rise of 401(k)s
This article is for informational purposes only and does not constitute financial, tax, or investment advice. Consult a qualified financial professional before making retirement planning decisions.
Disclosures
The information on this page is provided for educational purposes only and is not intended as investment, legal, or tax advice. It is designed solely to illustrate how longevity-linked investment benefits may work under certain assumptions. Actual results will vary. All illustrations, examples, and case studies are hypothetical and are intended to demonstrate potential scenarios — not to predict or guarantee actual outcomes. They do not represent the performance of any individual investor, portfolio, or account.
Key Assumptions Used in the Illustrations
Life expectancy and mortality projections are based on the most recent Social Security Administration (SSA) tables available at the time of simulation.
In the event of death or early withdrawal, hypothetical scenarios assume that investors who exit early, or their estate in the event of death, may receive 75% of the lesser of the initial investment or current market value, plus 1% for each full year the account was active. Case studies assume standardized market growth of 8% annually and do not incorporate unexpected market volatility, inflation, changes in interest rates, or changes in an investor's personal circumstances.
Simulations may assume a 3% annual early withdrawal rate prior to payout or death. All figures shown are net of fees. No forecast, projection, or hypothetical return should be relied upon as a promise or representation of future performance.
Past performance is not indicative of future results. The 8% annual market growth rate used in illustrations is a standardized assumption for modeling purposes only and does not represent the historical or expected performance of any specific investment. Note that early or voluntary withdrawals by other participants can affect fund performance and the size of distributions, and that a higher-than-expected number of participants reaching payout milestones may reduce the per-participant benefit received.
Savvly's Longevity Benefit is not a bank product, not FDIC insured, not insured by any federal government agency, not a guaranteed or insured investment, and not insurance. Investment values may decline.
Savvly's Longevity Benefit may not be suitable for all investors. Eligibility to invest is subject to qualification requirements and not all investors will be eligible. Investors should carefully consider their investment objectives, risk tolerance, time horizon, and financial situation before investing. See savvly.com/disclosures for current eligibility criteria, fees, risks, withdrawal terms, and fund assumptions.
This content is published by Savvly, Inc. Savvly has a financial interest in the products described and this content should not be interpreted as independent financial research or analysis. Investors should carefully evaluate their own circumstances and consult a qualified financial professional before making any investment decision.
