Retirement is a New Fad

The first precursor to modern retirement occurred in 1883 Germany when Chancellor Otto Von Bismarck announced that he would pay a pension to any non-working German over the age of 65. During this time, in America around 76 % of those 65 and over participated in the labor force. The rate was down to 43.5% in 1940, after Franklin D. Roosevelt invented Social Security. Now it stands under 17.5%

The idea of people spending their golden years in a life of leisure is newer than the invention of the flying machine. First, people didn’t live that long. The life expectancy didn’t pass 65 in the U.S. until 1949 for men and 1938 for women. It is currently at 78.24. Those who did manage to live that long continued to work. Often they continued working until the day they died, transferring to a more advisory role opposed to a physical one. But as the amount of survivors grew, the amount of advisory job openings did not.

For thousands of years, humans who outlived their ability to support their self simply moved back in with their children. Today, fewer than 5% of retired men live with relatives. The decline in agriculture also contributed to retirement, as factory work often requires younger workers. However, the largest factor in increased retirement seems to be the general rise in income over the past 100 years. More people have the ability to support themselves off of savings, so more choose to do so. If this trend of increasing buying power reverses, then naturally less people will be able to retire. As programs like Social Security and Medicare increases buying power in old age, their failure would also result in less retirement.

It may be that the idea of universal retirement has always been a pipe dream. Since less retired persons are relying on personal savings (according to a 2011 survey conducted by the AARP, 28 % of Baby Boomers “expect to rely on Social Security for all or most of my income during retirement”), the weight of supporting them falls upon the young. The societal burden of the elderly, especially in health care (Medicare), may prove too much for the beleaguered young work force to bear. Only time will tell.

Additional Resources

Life expectancy in the U.S.: http://demog.berkeley.edu/~andrew/1918/figure2.html

EH.net Economic History of Retirement in the United States: http://eh.net/encyclopedia/article/short.retirement.history.us

The New York Times The History of Retirement: http://www.nytimes.com/1999/03/21/jobs/the-history-of-retirement-from-early-man-to-aarp.html?pagewanted=all&src=pm

 

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