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retirement: Definition, Synonyms from Answers.com

Aging is associated with an increased likelihood of major life transitions, such as onset of disease and disability and of widowhood. In contrast to these "unplanned" changes, retirement is a major transition that is often contemplated, anticipated, and planned for a number of years before the actual event. Retirement at the end of one's career has been described as "a fixture of the American social ethos and political economy" (Hayward et al.,1998). Much research has focused on the economic aspects of retirement, particularly income security, while other research has tried to describe and understand the potential negative impact of retirement on health and well-being.

Many reviews of the evidence have concluded that a negative impact on physical and mental health of retirees has not been demonstrated. This conclusion is based on convergent evidence showing an absence of an adverse impact, rather than confusing evidence that does not permit any broad generalizations.

Older studies tended to show neither adverse effects nor benefits associated with retirement. Some specific variables, such as subjective evaluations of the health of retirees, sometimes showed health improvement, but this was seen as a function of reinterpreting one's health in the absence of the physical demands of a job. More recent studies have tended to show some benefits of retirement, primarily in the psychological domain and in health behaviors. One longitudinal study did show modest adverse effects on blood pressure and serum cholesterol, but these were deemed clinically insignificant. Retirement could also lead to a higher propensity to seek care, which might be misinterpreted as more episodes of illness. A 1991 study of older steel workers who were forced to retire early because of downsizing did not show any adverse effects on their health. Thus, loss of a job close to normal retirement age may have only small negative effects.

In addition to the broad conclusion of no adverse impact on health and functioning, the following points can be made on the basis of accumulated evidence:

Variations in postretirement outcomes are most convincingly seen as reflecting a continuation of pre-retirement status, particularly in the areas of physical health, social and leisure activities, and general well-being and satisfaction.
Certain predictors of outcome, such as prior attitudes toward the process of retirement and expectations about post-retirement outcomes, appear to make their contribution primarily via their association with underlying variables, such as prior health status and financial aspects of retirement. Consequently, they do not indicate the differential impact of retirement but rather reflect, once again, a continuation of pre-retirement attitudes and status.
Variables reflecting aspects of a person's work role (e.g., job satisfaction, work commitment) do not appear to be powerful or consistent predictors of outcomes. This conclusion may be viewed as somewhat of a surprise, and it can be argued that the cumulative evidence on this point is not yet very compelling.

There is no question that poor health leads to "early" or "involuntary" retirement. This makes it difficult to test the proposition that planned ("on schedule") retirement does not have a negative impact, but unplanned and involuntary ("off schedule") retirement does. The difficulty is that the downward health-status trajectory that precipitated the retirement will manifest itself as poorer health status after retirement.

Those who choose to continue to work well beyond conventional retirement age are an unusual group, made up of people in good health and with a strong commitment to work. It is in this group that the effects of "mandatory" retirement need to be studied, not among blue-collar workers who usually prefer to retire early, and do so if retirement benefits are adequate. But, unfortunately, people in such occupational groups as doctors, judges, and farmers, who often continue working beyond normal retirement, are not easily recruited into a study of "mandatory" retirement.

Phyllis Moen, a sociologist, has argued that the relationship between retirement and health is a very complex one and that most designs do not capture this complexity. She has developed a life-course model that may lead to a more sophisticated research agenda for the future. In spite of this complexity, the accumulated evidence so far leads to the conclusion that no adverse effects of retirement have been documented.

Bibliography

Gall, T. L.; Evans, D. R.; and Howard, J. (1997). "The Retirement Adjustment Process: Changes in the Well-Being of Male Retirees Across Time." Journals of Gerontology: Psychological Sciences 52B:P110–P117.

Gillanders, W. R.; Buss, T. F.; Wingard, E.; and Gemmel, D. (1991). "Long-Term Health Impacts of Forced Early Retirement among Steelworkers." Journal of Family Practice 32:401–405.

Hanushek, E. A., and Maritato, N. L., eds. (1996). Assessing Knowledge of Retirement Behavior. Washington, DC: National Academy Press.

Hayward, M. D.; Friedman, S.; and Chen, H. (1998). "Career Trajectories and Older Men's Retirement." Journals of Gerontology: Social Sciences 52B:S91–S103.

Kasl, S. V., and Jones, B. A. (2000). "The Impact of Job Loss and Retirement on Health." In Social Epidemiology, eds. L. Berkman and I. Kawachi. Oxford, UK: Oxford University Press.

McGoldrick, E. A. (1989). "Stress, Early Retirement, and Health." In Aging, Stress, and Health, eds. K. S. Markides and C. L. Cooper. Chichester, Sussex: John Wiley.

Moen, P. (1996). "A Life Course Perspective on Retirement, Gender, and Well-Being." Journal of Occupational Health Psychology 1:131–144.

Palmore, E. G.; Fillenbaum, G. G.; and George, L. K. (1984). "Consequences of Retirement." Journal of Gerontology 39:109–116.

Parnes, H. S., and Sommers, D. G. (1994). "Shunning Retirement: Work Experience of Men in Their Seventies and Early Eighties." Journals of Gerontology: Social Sciences 49:S117–S124.

— STANSILAV KASL; BETH A. JONES

Concerns for aging and the relevance of this issue for society seem to have had little impact on Americans before the beginning of the twentieth century. Although retirement contracts existed in colonial America, this was a gradual process that allowed the head of a household to transfer title to his property to an heir in exchange for money or services that might be required by the elderly couple or individual.

The Origins of Mandatory Retirement (1800–1900)

Mandatory retirement programs for public officials were introduced by some state legislatures between 1790 and 1820. In 1860, a few states required state judges to retire as they became elderly. Still, by the late 1800s, most businesses had no formal policies regarding retirement at a specific age, nor were there any laws requiring older persons to stop working once they reached a specified age. If a business chose to eliminate older workers, it normally did so through an informal process. However, in most cases, it seems as if people simply kept on working until they made the decision to stop, or until they were no longer capable of doing so. It is likely that older persons were also valued for their experience and knowledge, and this may have been especially true as the United States began to industrialize and was preparing to assume the role of world power. Additionally, the elderly could serve as a source of moral guidance for the young. On the farm, an older person still retained his or her knowledge about agriculture and might be useful by performing some needed chores.

It appears that before the twentieth century, the nature of American society made forced retirement undesirable. Most businesses were far too small to assume the financial responsibility of offering pensions to their employees, who might only number a dozen or so. This small employee base also made it nearly impossible for employers and workers to share the cost of retirement. Second, it was not uncommon for close personal relations to develop between worker and employer, and this may have made discharging older workers unpleasant and, therefore, uncommon. Finally, as late as 1890, most Americans were still working on farms, which was not an occupation conducive to mandatory retirement. In general, skill and experience became effective substitutes for the loss of strength and endurance in later life. Society seems to have expected older Americans to remain productive and elderly individuals lived up to this expectation for as long as they could.

Further stunting the development of mandatory retirement through the turn of the twentieth century was the tendency of older workers to retire on their own. A few industries had grown large enough by then to employ enough people to make it possible to develop some sort of mandatory retirement system. The railroad industry inaugurated a pension system in the last part of the nineteenth century and the federal government offered pensions to Union Army veterans in 1890. Although these programs may have induced some workers to opt for retirement, a mandatory system of retirement was still decades away. Most who retired did so voluntarily, and often the decision was made because they no longer were able to work safely or efficiently. Notably, in 1840, about 70 percent of American males over age sixty-five were working; half a century later, with the American economy undergoing a dramatic transformation due to industrialization, the percentage of men over age sixty-five who were still working had hardly changed.

During the last two decades of the nineteenth century, meanwhile, the American business scene was being transformed. Corporations were becoming the dominant form of business organization; larger numbers of workers were moving to the nation's cities and taking jobs in factories and offices. The American marketplace had been unified by the railroads and with this came an increase in competition and a growing desire to eliminate business rivals. These alterations would make a mandatory system of retirement feasible, as workers were being organized into more efficiently managed groups. A system of mandatory retirement could solve problems such as reducing unemployment and turnover rates, while allowing management to sustain a younger and more efficient labor force. Labor, meanwhile, could utilize this system to transfer the burdens of work from one generation to another, especially in overcrowded labor markets.

This meant that while corporations were experimenting with ways to restrict competition through restraint of trade devices such as monopolies, trusts, and holding companies, they were also seeking to reduce the number of elderly workers employed. Restrictions on hiring the elderly were implemented and mandatory retirement programs were begun. An increase in competition and shorter workdays further aided the development of these policies.

Despite these measures, older workers were not retiring in sufficient numbers. The rate of unemployment for the elderly in the industrial 1890s was about the same as it had been in the agricultural 1840s. Retirement to an urban tenement flat or even the poorhouse in industrializing America was greatly different from retiring on the family farm half a century earlier. Older workers who had little in the way of savings, and who were unable to rely on community resources to assist them in easing the financial onus of retirement, clung to their jobs desperately.

The development of mandatory retirement in the United States was also affected by the economic transition from an economy based on productivity and agriculture to one focused on consumerism. The Panic of 1893 led businessmen and others to conclude that the nation was beginning to produce more goods than the domestic market could absorb. These beliefs led to an increased emphasis on advertising, marketing, and consumerism in an effort to develop untapped domestic markets. Later, the Great Depression strengthened this changeover from production to consumption, further pressuring the nation's elderly to retire and make way for a new generation of workers while spending their accumulated benefits. By the 1960s, retirement itself would become a consumer item, marketed to potential buyers just like any other product.

In the late nineteenth century, unemployment and poverty were thought of as being distinctly different. The term "unemployment" came into greater use as a result of the Panic of 1893, and this concept led employers to begin discriminating in their hiring and retention of employees. This was done by emphasizing the benefits of keeping outstanding workers and eliminating inefficient ones. Therefore, a shorter work life, aided by mandatory retirement, could help reduce unemployment. This idea began to gain acceptance in the 1890s and would become national policy with the development of railroad retirement and social security laws in the 1930s. However, some companies had begun to develop private pension plans well before then.

Early Pension Plans

The first railroad pension plan was established by the American Express Company in 1875. The Baltimore & Ohio (B&O;) Railroad followed suit in 1880, while the Pennsylvania Railroad inaugurated a plan in 1900. The B&O; plan provided for old-age income protection, allowing workers to retire voluntarily at age sixty-five, or, if they were disabled by illness, at age sixty. Because old age was commonly perceived and treated as a disabling illness, this plan gave retirees the same benefits workers who suffered long-term disabilities received. An innovative feature of the Pennsylvania Railroad retirement plan was corporate control of the employee retirement plan. Earlier plans had left the administration of benefits to company relief associations. The Pennsylvania Railroad instead created a relief department that gave the company control of the plan, while permitting management total control over policy, administration and financial decisions. This set the precedent for the development of modern personnel supervision, which would directly affect the future of pension and retirement benefit packages. Pension plans such as these were put in place out of a desire to create a stable and efficient relationship between workers and management.

Despite these examples, only a handful of companies, especially those that were industrializing, had established some type of pension plan by 1900. One obstacle that may have discouraged more firms from implementing pension plans was the long-term commitment they required. Employers preferred profit-sharing plans, which shared benefits with the employees as a whole, over retirement plans that gave benefits only to the elderly and seemed like a far-off promise to younger workers. Long-term commitments of a crucial nature such as pension programs often led corporations to reject them outright.

As a result, many retired men in the nineteenth century were dependent upon their families for support. About half of all retired males in 1880 lived with their children or some other family member. Those who had no family, or whose families were unable to offer support, were often relegated to institutions run by charitable associations, often referred to as poorhouses. Songs, poems, and even films raised the issue of what the future might hold for unemployed elderly workers and they commonly concluded that his fate would be that of relegation to the poorhouse. Welfare reformers often referred to the likelihood of penniless elderly retired workers being forced to reside in poorhouses. The poorhouse became a symbol of the helplessness of the elderly in the industrial age in the minds of reformers, who feared that more and more people would be forced to enter these institutions until most old people resided in them. They argued that only old-age pensions could prevent this tragedy from occurring. Although reformers exaggerated the number of persons who were actually institutionalized in the late nineteenth and early twentieth centuries (about 2 percent), the fear of being placed in a poorhouse had a vivid and dramatic impact on public perceptions about the fate of the elderly and contributed to demands that the government should provide some sort of assistance.

Retirement and Scientific Business Management

As the Progressive Era took hold, a popular notion held that scientific management could result in the elimination of waste and inefficiency in business, government, and society. At the same time, rural poverty and other problems, such as poor health in the nation's cities, could be overcome. Business leaders especially approved of ideas that would improve efficiency, order, and organization. One of the issues that came under consideration was the role of the elderly worker, not only in the workplace, but also in society in general. Arguments, which suggested that productivity began to decline after age forty, strengthened the view that workers should retire once they reached the age of sixty since they were likely to have become inefficient. Critics of this line of reasoning felt workers could remain productive past the age of sixty, yet still found a certain logic in the concept that one should retire in his or her later years.

Advocates of efficiency and progress argued for ideas that threatened the continued employment of workers who could be seen as sources of inefficiency. Younger persons undoubtedly thought of these ideas as a precursor to an age of opportunity, and those nearing an age where retirement might be an option could think of that state as a form of leisure earned from years of working. Resistance to the concept of retirement would continue to be strong until the 1930s. At this time, the shortage of employment opportunities combined with the greater availability of pensions and social security allowed the concept of retirement as a time of leisure to enter the mainstream. Promoters of efficiency in the workplace, however, helped contribute to the image of an aging population that would continue to threaten productivity in the United States. For the country to continue to progress, older workers would have to step aside to make way for younger ones.

One result of this was an increase in age discrimination in the country. Job applicants were more likely to have to take physical examinations, and some companies applied these rules more strictly to older men and women applying for work than to younger ones. Contributing to the rise in discrimination toward the elderly was a growing cult of youth in the 1920s. With the rapid spread of technology, particularly the automobile, the nation's young were increasingly expected to lead the way into the future, rather than the older population. The business community especially embraced these ideas, and employers began to look for vigorous and energetic employees. Some companies still recognized that older workers had a certain value, but the preference was for younger employees. Retirement now offered employers the chance to restructure the work force. Since it was impersonal and equal in application, retirement permitted businesses to offset the need for efficiency with labor-management relations that downplayed the more personal relationships of the past. After 1925, retirement was viewed as a useful tool for correcting the problems of unemployment in depressed industries as well as in the economy.

The Federal Government and Retirement (1900–1935)

The question of retirement also affected the federal government. The interest of Presidents Theodore Roosevelt and William Howard Taft led to the creation of a series of commissions to investigate the manner in which a federal retirement policy might be implemented. Due to opposition from the Woodrow Wilson administration, legislation enacting such a program was not passed by Congress until 1920. Under this law, civil service employees could retire at age seventy, as long as they had a minimum of fifteen years of service. Other employees, such as postal workers and clerks, could retire at sixty-five, and railway clerks at age sixty-two. Retirement benefits were determined by the number of years the retiree had worked. However, the law did not require mandatory retirement, and a person could work for as many as four years past his or her scheduled retirement date. The law was amended in 1926 to provide greater benefits, as the original pension was inadequate to meet the needs of those who had retired.

The Great Depression intensified the problem of unemployment and poverty among the elderly. By 1935, more than 50 percent of those workers over sixty-five were unemployed. Pension benefits offered little or no relief, as private plans were failing and state and local governments were cutting back or eliminating pension programs.

Plans to relieve this problem, such as the Townsend Plan and Lundeen Bill, were proposed, but not enacted. The Townsend Plan called for a monthly payment of $200 to older Americans, who would be expected to spend the money within thirty days. The Lundeen Bill proposed a payment for unemployed Americans who were eighteen or older, including elderly workers. But neither plan truly concentrated on retirement.

Social Security

From the beginning of the New Deal, members of Franklin D. Roosevelt's administration, led by Labor Secretary Frances Perkins, lobbied for a federal program that would provide social insurance for the elderly and unemployed. Roosevelt publicly expressed his support for such a program in 1935, and the Social Security Act was passed by Congress that same year. One of the most complex and far-reaching acts ever passed by Congress; the Social Security Act provided two types of aid to the elderly. Those who were impoverished at the time the act was passed received fifteen dollars in federal aid each month. Those Americans who were employed were placed in a national pension program funded by social security taxes. Eligible workers could begin receiving payments in 1942, and benefits ranged from ten dollars to forty-two dollars monthly. Many workers, including domestic servants, farm workers, and self-employed individuals were excluded, and there was no provision for health insurance. But, by encouraging older workers to retire, the Social Security Act helped open up jobs for younger workers.

The pace of retirement did not increase significantly at first, even with social security and the opportunity to receive federal benefits. As late as the 1950s, studies conducted by the Social Security Administration indicated that older workers based their decision to retire more for reasons of health than the availability of federal benefits. The fact that the benefits were fixed was seen as a threat to financial security, especially as inflation could reduce the purchasing power of a retiree.

Retirement: an Increasing American Trend (1950–1980)

Even with the concerns about financial security, retirement was becoming more of a social occurrence in the 1950s. Private insurance companies began marketing programs designed to help people prepare for eventual retirement. Postwar prosperity contributed to the growing idea that retirement could be a time of pleasure and creativity that was society's reward to those who toiled for a lifetime. The growth of leisure industries, along with mass tourism and entertainment such as movies, television, golf, and many spectator sports, offered activities for the elderly at prices they could afford. Mandatory retirement became less of an issue; as early as 1956, women could retire at age sixty-two, while men received that opportunity in 1962. Reduced social security benefits accompanied early retirement in either case.

Concerns about poverty among older Americans led to passage of the Older Americans Act of 1965, during the administration of Lyndon Johnson. But the administration of Richard Nixon inaugurated the age of modern retirement. Although earlier amendments to social security had made more workers eligible, the benefits were no longer adequate. The benefit levels were increased five times between 1965 and 1975, and in 1972 benefits were tied to the Consumer Price Index. These adjustments allowed retired Americans to more closely maintain their standard of living, while legitimizing the concept of retirement as a social status that could be entered into voluntarily. Amendments to the Age Discrimination and Employment Act in 1978 raised the mandatory retirement age to seventy in most occupations, while the Employee Retirement Income Security Act (ERISA) offered some protection against loss of benefits in private pension plans.

Retirement in the Twenty-First Century

In general, retired Americans today have become a leisured class. Continued technological advances have created products designed to satisfy increasingly narrow portions of the retirement market and offer more leisure-time choices. Retirement communities, particularly in the Sun-belt, focus on the needs and interests of those residing in them. Recreation and leisure costs have fallen as new and better products have been introduced. Today's elderly, as a class, are also better able physically to partake of these options, and many leisure-time activities include various forms of exercise and sports. Travel opportunities have also increased. The tax-exempt status of retirement savings helps offer an incentive for retirement since it makes retirement income nearly the same as earning a salary, allowing the retired individual the maximum opportunity to take advantage of leisure-time activities that can replace the stimulus work satisfaction may have offered. Even so, many senior citizens continue to work after retirement. They do so either to supplement inadequate benefit packages, to help support other family members or to sustain a level of status they held before retiring and that their benefits do not allow them to maintain otherwise.

Retirement has also allowed the elderly to enhance their political power. Political concerns of the elderly are promoted through senior citizens groups, of which AARP is the most prominent. Other groups, such as the Alliance for Retired Persons, founded in 2001, also lobby on behalf of the nation's elderly. Organizations such as these have been able to use their lobbying efforts successfully to protect social security, but have made little progress in regard to getting legislators to enact new programs for their benefit.

The future of retirement is difficult to predict. Growing concerns over the availability of social security payments to future generations has led to the feasibility that retirement may not be an option for the next generation. Improvements in medical technology and health care have resulted in increased lifespans, so that Americans can work efficiently and productively for more years. It may be that in this century many Americans will delay retirement as they are able to continue to play an important role in society and the workplace for a greater period of time.

Bibliography

Carter, Susan B., and Richard Sutch. Myth of the Industrial Scrap Heap: A Revisionist View of Turn-of-the-Century American Retirement. Cambridge, Mass.: National Bureau of Economic Research, 1995.

Costa, Dora L. The Evolution of Retirement: An American Economic History, 1880–1990. Chicago: University of Chicago Press, 1998.

Graebner, William. A History of Retirement: The Meaning and Function of an American Institution, 1885–1978. New Haven, Conn.: Yale University Press, 1980.

Haber, Carole, and Brian Gratton. Old Age and the Search for Security: An American Social History. Bloomington: Indiana University Press, 1993.

Krajcinovic, Ivana. From Company Doctors to Managed Care: The United Mine Workers' Noble Experiment. Ithaca, N.Y.: ILR Press, 1997.

Price, Christine Ann. Women and Retirement: The Unexplored Transition. New York: Garland Publishers, 1998.

Ransom, Roger, and Richard Sutch. The Trend in the Rate of Labor Force Participation of Older Men, 1870–1930: A Review of the Evidence. Cambridge, Mass.: Harvard University Press, 1997.

Sass, Steven A. The Promise of Private Pensions: The First Hundred Years. Cambridge, Mass.: Harvard University Press, 1997.

Schaie, K. Warner, and W. Andrew Achenbaum. Societal Impact on Aging: Historical Perspectives. New York: Springer Publishing, 1993.

Schieber, Sylvester J., and John B. Shoven. The Real Deal: The History and Future of Social Security. New Haven, Conn.: Yale University Press, 1999.