We are building a very big and very dangerous bubble for ourselves. If (better yet, when) it pops, it may feel more like an explosion for many of us.

Here are a few simple statements that apply to those nations which had major increases in population following World War Two, the group we usually call the "baby boom". If any of them are news to you, then a quick search using Google, Yahoo or another search engine should offer you evidence of all of them, if needed.

• The number of people reaching traditional retirement age is growing rapidly and will continue to for years to come.
• If the trend continues, there will be fewer and fewer working people to support more and more retirees.
• As a group, we are retiring at the same age as our parent's generation or earlier.
• Our life spans have increased significantly in recent decades. Simply put, we are living longer.
• Medical science (genetic engineering, stem cell research and a long list of others) will very likely extend our life spans even longer, increasing the time spent in traditional retirement and increasing the financial burden of traditional retirees.

We are in trouble. This cannot and will not lead to a successful traditional retirement for the majority of us. The numbers do not add up to success. We are in trouble as a society, but even more so if you are already retired or seriously planning for it, unless you break with tradition.

Do the Math

The problem roots from the difference between what I will call active income (income earned by salary, fees and other payments for work done by you) and passive income (income received from social security, a pension, investments, and other payments that do not require your work, but the work of others).

With active income, you have some influence over what you receive. Yes, I know, often you do not feel you have very much influence at all on your income, but you can work extra hours if overtime is paid, you can increase your productivity in the hopes of getting a salary increase or a promotion, you can look for a new job with a resume that shows you are currently employed and familiar with today's work world, and so forth. You do not control your income, but you influence it directly.

With passive income, you have little or no influence over what you receive. Politicians set your social security payments. Your employer directly influences your pension in a way you cannot. The pension plan may not be able to pay the planned amounts or it may go bankrupt. If so, there is nothing you can do about it directly. If you own stocks, they go up in value only if other people buy them. As tens of millions of people have learned in the last couple years or so, the value of your house is absolutely dependent on what someone else will pay you for it.

Traditional retirement is supposed to be a time in your life of financial independence, but it is really a time of increasing financial dependence.

If you retired in 1960 at 63, it was perfectly ordinary to die at 73. If you had started seriously saving money for your retirement so you would not depend solely on social security or a pension at age 43 (many start later), you have 20 years of active income to save for 10 years of retirement. Two years to save then for each year of retirement later.

Today, you can retire at 63 and expect to live to 83. Now you have 20 years of active income to save for 20 years of retirement. Only one year to save now for each year of retirement later.

But this is not the end of the story. Due to the rapid progress being made in the medical sciences, you are very, very likely to live to 93, whether you want to accept that or not at this time. It is extremely likely that you have 20 years of active income to save for 30 years of retirement. Only eight months to save now for one year of retirement later.

Worse yet, the odds of living to 103 are increasing constantly. If so, you now have 20 years to save for 40 years of retirement. Only six months to save now for one year of retirement later.

And remember, even this depends on beginning to save seriously for retirement no later than age 43. Many people do not and cannot start at that age.

The probability that you will get into serious financial trouble later, during traditional retirement, increases as life spans increase. You can very easily imagine having to find a job at an age when you never expected that you would need a job. But if you run short of passive income, you will have to look for new active income.

I have hired people for years due to positions I have held. I always look for someone who has a good work ethic and is up-to-date in their understanding of their field. I have had many retirees come to me, looking for a job because their retirement income has fallen or their retirement expenses are greater than they expected.

Hear me clearly, once you have been completely out of the work force for three years or more, doing nothing but "enjoying retirement", you are not very interesting to me as an employee. Too many retirees have come to me for jobs because they had to, not because they wanted to.

I do not want to hire someone who bitterly regrets having to ask me for a job. I want to hire someone who is excited about working for me. I do not want to hire someone who has been out of touch with the work world and today's job requirements for years. Sure, he or she may know yesterday's job requirements perfectly, but yesterday is history. Every field is going through rapid change. If you do not keep up with your field, you will get behind and that is not what I am looking for in a job candidate. If that is true for someone who is out of the work world for three years, what if you come back after ten years of fifteen? You can guess. If you were in an employer's position, I think you would feel very much the same way.

Tens of millions of people, especially in the so-called "advanced" societies, are creating or already have created their very own retirement bubble. Oh, how it glistens! It hangs there in our mind's eye, so beautiful, so wonderful. But it is very, very delicate. The slightest problem and it can pop. Once it has popped, it cannot be put together again.

We are in trouble indeed. This cannot and will not lead to a successful traditional retirement for the majority of us. The numbers do not add up to success. We are in trouble as a society, but even more so if you are already retired or seriously planning for it, unless you break with tradition.

Enough bad news! How can we deal with this effectively and be happy? We can and must do something about this.

A Whole New Stage of Life

In an earlier essay on retirement here at this website, I defined retirement as "the period in life shortly preceding death". Not a very cheerful definition, but one that was accurate for many centuries. Only in recent years has retirement been treated as if it was a 20-year (or more) vacation. Not so long ago, people retired, gave up their active income, and enjoyed themselves as much as possible. If they died five or ten years later, it was a sad event, but no surprise. The idea of retiring for 20 or 30 years never entered my parents' minds. My mother lived into her 90's, much to her dismay. Those last years were not easy ones. As the son in charge of her financial affairs, I can assure you that she was not financially prepared to live that long, but she was not emotionally prepared either.

It is a safe bet that some of us are going to be as unprepared financially and emotionally on our 100th or 110th birthdays as she was on her 90th.

We should let retirement be that period in life shortly preceding death. But if you are not yet ready for that, what do you do? Work forever? Some people will do that and enjoy it, but most folks today who are retired or planning to retire in the next few years would hate to even think of it. Whether we want to admit it or not, we have come to feeling "entitled" to a multi-decade, vacation-style retirement and if cannot have one, we get depressed.

We need a new stage of life.

Forget Retirement, Take a Life Sabbatical

There is a long history to the sabbatical, but in modern times, it is usually a period of a year or so that a university professor takes off from regular duties to do his or her own special research. It is not a vacation, but it is a very open period when the individual gets to try out new ideas, investigate new techniques, and be free of the pressures of day-to-day life at a university. However, the professor is required to have a planned series of activities and get the approval of his or her department before beginning. Planning a university sabbatical takes a lot of time and effort.

A Life Sabbatical is a lot easier and a lot more fun. You do not need someone else's approval and you do not have to plan it all in detail in advance. It combines the best elements of traditional retirement with the focus necessary to increase your chances of a secure, happy future. I am going to give you a brief overview.

When you think you are ready to retire, you don't. Instead you take a three-year Life Sabbatical. During those three years, you enjoy life to the fullest. You get up when you want to get up, you go where you want to go, and you do what you want to do. There is one difference. Throughout that time, you are keeping your eyes and ears open for something that you enjoy doing that might make you some income. If you have that in your mind, you will look for it. If you look for it, you will find several possibilities. But remember, you are looking for something you enjoy doing, not just something to earn income. It does not have to have anything to do with your former employment field. That is entirely up to you, but it does need to be something that will bring in some money. If you have not identified something in the first two years, make it a major focus of your third year.

The purpose of a Life Sabbatical is to get your mind off never working again, never earning money again, just spending it while depending on others to provide it. The Life Sabbatical is not a desperate attempt to find some income when it is too late. It is a positive move on your part. And what about retirement? That stage comes later when it needs to, but not before.

Yes, if you tell people you are not retiring, just taking a Life Sabbatical, some will laugh and some will just be confused. But as you explain what you are doing, the laughter and confusion will slip away. You are talking about something that concerns more people than you may imagine.

And trust me on one thing. Even if they laugh, they will take that idea home with them. If they are married, they will mention it to their spouses. They will talk about it and you may be surprised to find that, once they have thought about it, they take a similar approach.

I am going to leave it at that for now. MiddleAge.org is not just a retirement site. But I do have quite a few other suggestions for people who find the idea of retirement a little scary, especially during these difficult economic times. If you are interested in what more I have to say on the topic, visit my Retirement Bubble blog at

blog.theretirementbubble.com.