When Should We Retire?


Perhaps because some workers had clung to the work-based, nineteenth-century system of security, or because retirement had not proved to be the panacea some had expected it to be, on the eve of the Great Depression the modern system of retirement had yet to take hold. As of 1932, less than 20 percent of American workers were covered by pension plans.

The Depression, curiously, helped gain widespread acceptance of the new system. At a time when jobs were so hard to find, thousands of older workers willingly sacrificed their own work lives and retired to open up jobs for the young.

IN THE TEN YEARS after 1930, the percentage of males over sixty-five in the labor force dropped a full ten points. More important, the decline was not only related to the Depression, for many older workers stayed out of the labor market through the boom years of the Second World War. By the early 1950s, when corporations began to support benefit increases, retirement had replaced work as the general experience of older Americans.

Two factors accounted for retirement’s final triumph. The first was the Social Security Act of 1935. Drafted by the Committee of Economic Security, appointed by Roosevelt in 1934, the act reflected the industrial relations outlook of the committee members. The program was designed to facilitate—but also to ensure—the ouster of older people from the work force. It included what is called the “retirement test”—fifteen dollars per month being set as the maximum one could earn without losing benefits. Although those who drafted the act were doubtless concerned with providing economic security to retired persons, there was never any question that they had to be retired—removed from the labor market—to receive benefits. As one committee member recalled later, “We never called these benefits anything but retirement benefits.”

The second factor contributing to the triumph of retirement was the “selling” of leisure. If the new system of retirement was to become dominant, more older workers had to “choose” the life of leisure. Thus life insurance companies—and others deeply involved in the pension business—began marketing retirement to the public. In a speech delivered to the National Industrial Conference Board in 1952, vice-president H. G. Kenagy of the Mutual Life Insurance Company urged his audience to prepare employees for retirement at fifty. “Just recently,” he said, “house organs that are coming to my desk have been doing a splendid job of selling the idea … that old age can be beautiful, and that the best of life is yet to come.… That is done by constant stories of happily retired people telling what they do, but still more, of course, emphasizing what they did to get ready for the life they are now living.” A host of new magazines for the retired, from Lifetime Living to Modern Maturity , boosted retirement as a nirvana of travel, hobbies, and petty capitalism. Most major corporations and labor unions developed retirement “preparation” programs, designed as much to condition employees to accept a fundamentally f unctionless old age as to plan financially for it. The state of Florida, hoping to lure the retired from the chilly North, held out the vision of retirement as an adventurous combination of work and play, emphasizing in its promotional literature the “endless opportunities to start small services and business ventures.” While academic sociologists of the 1960s praised retirement as a form of “disengagement” or “inevitable mutual withdrawal,” their colleagues in the new discipline of leisure studies argued that if the elderly found retirement difficult, this was because they had not yet learned how to enjoy themselves on what David Riesman called the “frontier of consumption.” When Americans learned to play, retirement would come naturally.

Unfortunately, maintaining an aging population in year-round leisure—even in moderate discomfort—has proved to be an expensive proposition.

They did learn to play. But even as they learned to frolic in the sun, the whole edifice of retirement began to show signs of stress. A combination of economic and social incentives had convinced millions of older workers that they could afford to retire and that they wanted to. Unfortunately, maintaining an aging population in year-round leisure—even in moderate discomfort—was proving to be an expensive proposition. And while the cost of funding Social Security began to seem prohibitive, raising the tax rates to keep the system sound was a politically risky business. A significant sector of the political and business communities became convinced that the nation, as a productive unit, could no longer tolerate retirement policies that were based on simple age classifications rather than on ability. Mandatory retirement, created in the name of efficiency, was now regarded as inefficient.

ONE RESULT OF these pressures was a spate of proposals to raise the eligibility age under Social Security. Another was the Retirement Act of 1978, which raised the permissible mandatory retirement age from sixty-five to seventy in most public and private employment. This denouement was, perhaps, inevitable; after all, the nation has some economic problems, and if a rollback of retirement would help to solve them, so be it.