Retirement

If you are in business, or read business news, or listen to any type of commentary at all, you're going to hear a lot about retirement.  For that matter, if you live to be 50 years of age, and I certainly hope you do, if you are not already, you're going to at least think about retirement with the American Association of Retired Persons sends you mail, implicitly suggesting that by age 50 you've amassed so much wealth that you are going to retire. And the topic appear sin professional journals all the time. The most recent issue of the ABA journal, for example, has its cover story on the topic of retirement.

For a lot of Americans, indeed most Americans, that's a bit of a cruel joke.  Most folks can't retire at 50, and most never have been able to do so.  Beyond that, however, at about that age you'll start to notice an interesting dichotomy of stuff on retirement, some of which is really scary, and some of which is somewhat delusional.

In terms of delusional, I'm always slightly amazed by the series of materials that seek to make you feel guilty about retiring, of which there is a fair amount (and, no, I'm 50 and not anywhere near retiring).  This stuff suggests that when you are of retirement age, say your 60s, you probably ought to do one of two things:

1.  You ought to be starting a new job/retirement/business that reflects your long hidden dreams and talents, or which expresses that series of dreams, talents and values you've developed in your years of work; or

2.  You ought to be able to use your retirement to live a wild life of traveling abandon and adventure.

I know you've seen this stuff.  You are retired, according to the television advertisement, and now you somehow own Monument Valley. Wow.

Or you are retired and open a vineyard in Tuscany.  Jeepers. . . your work really worked out for you big time.

Or you now can open a company that competes with Microsoft. . . or manufactures jackets for kittens, or whatever.  These portrayals are so common that one brokerage company actually made fun of them, in a clever way, with a befuddled individual who needs advice stating something like "A vineyard?  Come on!,", which brings me to the second type of retirement portrayal, which is that if you are in the Middle Class, forget it, it won't be happening.  You're doomed.  Not to sound to glum, but that portrayal is probably much closer to the mark.

All of which makes looking at retirement in a historical context both worthwhile and interesting.  Maybe even productive.  I.e., how did we get here.  Something has been occurring in recent years, to be sure, and this topic is in the news a lot one way or the other, whether it simply be due to a local well known person retiring, or it be warning news about most people in the near future never being able to retire.

One thing we might note here, however, right off the bat is that the common canard about "people living longer" simply isn't true.  People do not live any longer presently than they ever have.  As we addressed in the post about life spans, the very widespread notion that "people live longer today" is based upon a misunderstanding of statistics.  People don't live longer, they simply do not die from some untimely event, whether that be disease, violence, or injury, as frequently as they once did.  Indeed, they do not die by some of these causes (violence, death at birth, etc) nearly as frequently as they once did by a huge margin.  That means more live out their allotted years, so to speak, than was once the case.  Put another way, not too many people would regard being falling off of a hay rake and getting dragged to death a natural way to go, but more than a few teenagers experienced that sort of death up until relatively recently.

But this fact does inspire the two reactions noted above.  On one hand, the combination of better medicine, much less physically arduous labor, increased surplus income and the exceptionalist expectations of the Baby Boom generations has lead to a sort of expectation that the old won't ever grow old, and that we should expect to be touring Naples on bicycles up until our 90s.  And for a few, that is darned near true.  My mother didn't tour Naples on a bike, but she did ride one around town up until just a few years ago, when old age finally really caught up with her.  On the other hand, the same increase in the number of people who grow old, combined with massive societal changes in the past century, inspire legitimate fears in many that their declining years will be impoverished and difficult.

Most people now are used to the idea of there at least being something called retirement.  And while that concept goes back surprisingly far, retirement as an actual practice for most people does not.  Indeed, for most people, and I mean for most people on Earth, it didn't become a possibility until the late 19th Century.

Prior to the late 19th Century retirement for average people just didn't exist.  Part of the reason why, particularly in North American, is that in the much more rural economies of years past, there wasn't an economic ability for it, and there was certainly no state sponsored retirement of any kind.  Farmers basically worked on the land until they passed away, with it being the rule that, if they owned their land (and most North American farmers did) they passed the farm on to one of their children.  If they grew too infirm to work it, that passing on feature effected their retirement, basically.  They'd still be there, even if they could no longer work as much, or indeed at all.

This practice, by the way, is still pretty common with agricultural families.

In other lines of work, the same could also be true, however.  In any sort of family operation, the older male would generally keep working at it as long as he could and if there was somebody to pass it on to, he did.

 Blacksmith, and not a young one.

Where this opportunity didn't present itself, men and women with families, and that was most men and women, might eventually move in with one of their children for their retired years.  So, an old lawyer, like John Adams (also a farmer), or Clarence Darrow, might work up until his death, and many did.  But some might also pass beyond the ability to practice and retire, moving in with a family member and closing their practice.

Of course, some people became wealthy, but in the pre late 19th Century era, that didn't equate with retiring as a rule.  For some it did, of course, but that tended to mean that they had lives of varying degrees of abundance or leisure, depending upon the amount of wealth.  That doesn't vary much from now, expect that a much, much, smaller percentage of the population achieved wealth prior to World War Two.  There are, of course, exceptions.

So, with that being the case, how did modern retirement come about? Well, two ways.  War and Social Revolution.

That's a slight exaggeration, but only slight.

The first real retirements we can find, in the modern sense, start off with various armies.  How armies were raised and manned varied over the world in the 18th and 19th Century, but it's about that time that retirement systems for soldiers started to come into play.  Originally, there was none. Indeed, as shocking as it may now seem, in many European armies of the 18th Century soldiers were conscripted for life or near life terms, if they were conscripted.  Short term conscription for most European armies (the Russians excepted, Russians solders were conscripted for a term of 25 years) came in during the 19th Century, and for solid military reasons.  In the 18th Century, however, even British soldiers, who were volunteers, joined for life.

American soldiers, few in number until World War Two, never joined for life and always joined for a short term, but in both instances, there was no such thing as retirement.  If a soldier was retired, it was because he became too infirm or injured to keep on soldiering.  Every country recognized a a system for retiring soldiers in that situation, but only that one. So, showing that things can reverse direction, the lot of an 18th Century soldier was worse in this fashion than it was for a Roman soldier.  Roman soldiers actually could retire, with a grant of land.

The impact of this, however, was to put a lot of old enlisted men into service.  You can find plenty of pre Civil War American photographs of U.S. soldiers, for example, who are ancient.  They didn't get paid well enough to retire on savings, they didn't always have families, so they had to keep on working. There was no age cap on service, and they ultimately mustered out by infirmity or death.

That was a bad thing not only for the soldiers, but the armies as well.  To take the American example, getting 20 year olds (and the Army generally would not enlist teenagers up until the 20th Century) to spend the month of November in the snow, in Wyoming, eating moldy bacon is one thing.  Getting 60 year olds to do that, and to keep functioning, is quite another.  Now, a lot of 19th Century 60 year olds were perfectly capable of doing that, and even more are now, but in a profession in which, if you were a career man you were at it for decades, you had been badly injured and seriously ill at some point by that time, making it all the tougher.  Indeed, according to one statistical analysis I've seen, the majority of American men over 40 years of age lived with some chronic condition by age 40.  Probably the majority now do as well, but at that time, you just endured it. And enduring it wears you down.

The Army, indeed all armies, recognized this and they all began to introduce retirement systems.  In the U.S. the Army first allowed officers to retire after 40 years of service after the Civil War.  Soon thereafter, this policy was expanded to include enlisted men. Other countries adopted similar policies.

The Last Muster.  Pen and ink depiction of British Army pensioners, in uniform.

This served two purposes.  One is it simply recognized decades of service.  But it also recognized that younger men made better soldiers for a variety of reasons.  One was, of course, physical.  The original retirement system, which effectively retired U.S. soldiers at about 60 years of age, recognized that by that time they probably were physically pushing the limits of their service abilities.

World War One poster noting the physical abilities of generations of soldiers.

Indeed, this was so much the case that Theodore Roosevelt encourage the early retirement of officers who were no longer physically fit, during his presidency, by requiring officers to go on long rides (ninety miles)on their mounts.  All officers were expected to know how to ride in that era, and he tested them on it.  By that time, many older ones couldn't endure it, and accordingly they were retired.  Even officers in the Navy were given the choice of going on a very horseback ride, a very long bicycle ride, or a very long hike.

The other purpose was an intellectual one, however.  By the late 19th Century the military sciences were advancing rapidly, and the Army began to recognize that keeping old officers in place impaired the ability to adapt.  The American army was legendary for keeping men in their same ranks for eons, and by the early 20th Century, this was recognized to be a bad idea.  Sixty year old captains who had the same command for fifteen years were much less likely to appreciate newly introduced weapons than, for example, a captain in his twenties might be.  The Army accordingly dropped the retirement age to 30 years, effectively encouraging, but not requiring, men to retire early, at 3/4s pay, in their 50s.  

Even this proved to be problematic at the start of World War Two, and the Army, recognizing a need to adapt to a change in the nature of war, dropped the retirement age to twenty years.  This, it must be noted, was an early retirement age. To obtain full retirement a soldier had to stay in for 40 years, as they still do. But they could take half pay and retire at 20 years.  Less attractive at first to enlisted men as opposed to officers, this provided a means to encourage retirement for officers whom the service wanted out of the way, which they soon found other ways to additionally encourage.

 While the U.S. armed forces did indeed encourage a lot of older soldiers to "move on" at the start of World War Two, combat attrition in World War One had been so high in the Commonwealth nations that this poster actually was aimed at drawing back in World War One soldiers, noting that many in their 40s and 50s still had plenty of vigor for later service.  Unlike the U.S. Army, the British used a fair number of older officers during the war, as did the Germans.

This created the modern service retirement system we still have in place. The system spread out of the Armed forces and into nearly every type of uniformed service we have today.  Policemen, for example, generally can retire early at 20 years of service.  It's even spread out of uniformed service in some instances, however, and some other sorts of government workers have retirement systems of this type.

Retirement in other fields is a somewhat more recent phenomenon.  It's a product of the industrial revolution really.  Industrial employment, like military service, chewed men up.  It also organized them.  And this organization both created opportunities, and threats, depending upon how they were handled.  And it also removed men from the rural support system in which they'd previously lived.  If a blacksmith was injured in his small town occupation, chances are that his sons, or brothers, could take over for him, and if he had to stay home, no doubt in poverty, at least there was a home to go to.  When he grew old and could no longer work, the same was true, and chances were high that there was a fireside to stay near, as the younger men went out to work.

Once industrial labor arose, this was no longer true.  Early industrial laborers were displaced from farms and small towns to a very large extent.  As a result, they were disoriented, rootless, and in some ways at the mercy of their environment.  Ultimately, they came to agitate for protection, cognizant of the dangers of their work and what that meant for them personally.

This created a wide variety of responses, but one of them ultimately came to be socially sponsored retirement.  Men could not work in heavy industry indefinitely, but they could not leave those occupations and be able to depend on anything to fall back on. Something had to replace the family supported home to retire to, and that came to be retirement, either government sponsored or employer funded, both of which served to keep the social wolf from the door.

Early moves towards wider retirement started in the early 20th Century, with the first proposal for a Social Security being advanced in the Progressive Party campaign of Theodore Roosevelt.  Roosevelt's Bull Moose campaign failed, but the Great Depression gave new force to the argument and Social Security, a fairly radical proposal by historical standards, came to be reality under Franklin Roosevelt.  By that time, heavy industry had privately incorporated it in many instances. World War Two, which boosted the advantages to private industry to supply benefits during a period in which wages were frozen, boosted it further.

 

Female industrial laborer, World War Two. Labor had been agitating for benefits beyond increased wages since the late 19th Century, but it was World War Two that really changed the nature of health care and retirement in the United States.

This gave us the situation we had in the middle of the 20th Century, and which lasted until at least the 1970s. By and large, in private employment in the US, most occupations offered pensions of some sort.  This promised workers the ability to retire at age 65.  In addition to that, Social Security became available at age 63, with full benefits payable at age 65.  For those with service occupations, retirement came to be available after 30 or 20 years.  Frequently, those who had service employments went on to a second career, in light of the fact that they were retiring fairly young.

So far so good, but staring in the late 1980s, something began to break down in this system. Now, while that system hasn't completely broken, concern over the system is widespread.  What happened?

Well, for one thing work stability declined in the private sector, while seemingly becoming solidifying in the government sector, at least up until very recently.  For long time government employees, I'd note, many are having their last laugh now after years of deridment by those in the private sector.  I've heard this more than once, for example, from government lawyers who are nearing retirement and now see that their private sector fellows, who often chided them for sticking it out in "low paying" (which were really lower paying, not low paying) positions for decades.  Now the government sector lawyers are able to retire, while  many of those in higher paying private practices cannot.  Indeed, one comment of that type just appeared on an ABA website about retirement.

In the private sector manufacturing jobs became highly unstable, if they didn't disappear completely, and this spilled over into white collar occupations as well.  Much has been made of the fact that employees can't enter an occupation  and plan on sticking it out for their career for one reason or another.  One of the things little noted about that is that with that instability, has come the evaporation of retirement plans.  Retirement plans only make sense for long term employees, not short term ones. 

So, is this system broken?  Put another way, is it unrealistic?

That's hard to answer, but retirement is rapidly becoming something that is not nearly as certain for many people as it once was.  Social Security wasn't designed to provide a fancy retirement, just to keep people from falling into retired poverty, and it wasn't meant to cover 100% of the people who paid into it either.  Indeed, it still doesn't cover 100%, but in an era when medicine has made early deaths less common, more people now live into their old age and advanced old age.

But another aspect of this may simply be that expectations about retirements became unrealistic.  Truth be known, much of our concept of retirement is retirement as envisioned by the World War Two and Boomer generations, which was never the historical norm.  The abnormal economies of the 1940s through 1960s lead people, gradually, to an expectation of sort of a luxurious retirement, replete with a new home far away from where they'd worked.  Historically, however, in the 60 or so years prior to that, retirement just meant retirement in place and in scale.  People tended to live decades in one house which they'd paid off well before they retired.   When they retired, they stayed home, not traveled the globe and not dreaming of planting vineyards in Tuscany.

But in order to do that, a person has to have paid their debt down to next to nothing, or nothing, but the time they're in the 60s at least, if not their mid 50s.  Otherwise, they're going to have to have a pretty significant income in retirement.  That is unrealistic.

So, what does all of this mean?  Hopefully it doesn't mean that retirement has returned to its absolute historical norm, i.e., non existent.  But it does mean that the golden age of retirement is most likely over, at least for the foreseeable future, and in the type of economy we have now.  Social Security is already being readjusted to creep it back to its more historical demographic status, and ages of entitlement have started to go up.  I strongly suspect that will start occurring in government retirements as well, which are now strained.  Twenty year plans, where they exist, will disappear in favor of thirty year plans that only allow a draw once the recipient hits age sixty, much like Army Reserve retirements now work.  That'll probably continue as well.  For those retiring in the future, a paid off home with a garden in the backyard is probably a lot more likely than trips to France and vineyards in Tuscany.

Postscript

The New York Times has an article on retirees today noting that those who want to keep on working often have a hard time finding a job that suits them, and that those who have retired find they often like it better than they suppose.

I'm glad to read that really.  While its contrarian in nature, in our society, I find the general view that its great if people past retirement age can keep working, and that they really should. Should they, if they can retire?  I'm not so sure.  It's discouraging to think that the value of a person is measured only in their ability to work, and that for everyone it must be the case that all their adult years must be employed.  That says something about us, I think, as a society.

While it's also contrarian of me to mention it, this sort of taps into the theme of one of the Super Bowl advertisements from this year, in which an actor Neal McDonough discusses how in the US we get two weeks off per year for vacation (which is inaccurate for most Americans, most don't take all their vacation so they take less than that) while the French take August (which is also inaccurate, as the French also tend to extent their vacations with a general strike from time to time).  We're informed we're a can do sort of people, and at the end its suggested that our reward for that is a Cadillac.

Well, I have nothing against Cadillacs, but that advertisement sort of makes you wonder if you should go for a Peugeot instead and take August off.