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March 1, 2013

Historical Echoes: Retirement Timing Discussions with Nary a Mention of Finances

Amy Farber

One would be hard-pressed to find a discussion about the
timing of retirement these days that doesn’t mention finances. That makes it more
than a little surprising to find two examples from the mid-twentieth century
that broach the question of retirement age, yet are entirely silent about
financial considerations.

The 1958 TV episode of The
Real McCoys
Time to
” (three parts) asks the question, When should Grandpa (Walter
) retire? But it never brings up the questions of income or
allocation of funds. In this context of 1950s rural America, the questions that
help determine “when” are: When would Grandpa no longer be of use to the family?
When would he be physically unable to work? And when would he truly not want to
work? Grandpa gets more beat up by square-dancing than by working. He then
proceeds to start “dying” while recuperating in bed, only to be “brought back
to life” when the family demonstrates that he’s still needed. The episode
contrasts Grandpa’s attitude toward work, which is positive, with that of the family’s local postman, which is negative.

In a November 1947 article from The RotarianWhen
Should a Man Retire?
” (p. 8 for IE7 users), eight men try to answer the “when”
question: a barrister, oil man, neurologist, manufacturing company director,
medical examiner, director of education, director of a daily newspaper, and retired
bank manager. Note that this is a publication for Rotary Club members, who
according to the Rotary Club website, are committed to “Service Above Self.” These
Rotarians say many wise things, but income is never mentioned.

That none of the men mentioned financial considerations of
any kind could be a phenomenon of social class and the context of the article
itself. The contributors to the article seem almost to be competing for
high-mindedness, and it might not have been genteel to discuss dollars and
cents. In addition, there’s an assumption among the contributors that one is
doing work that one likes and it might have been out of place to address the
unfortunate workers who dislike their jobs. Even so, it’s doubtful one could
find an article today similar to this. If in the case of these professionals,
the failure to mention money was more about propriety than economics, in
Grandpa’s case, it’s the real McCoy. He really didn’t need to think about money
(in the sense of personal funds), as he would live, work, and die in the bosom
of his family.

The Georgetown University Law Center has posted “A
Timeline of the Evolution of Retirement in the United States
.” Its aim is to
provide “background on how the concept of retirement, and its legal treatment,
has evolved” and “emphasizes those laws that have come to shape how we view
retirement.” The timeline starts in 1875 with the first private pension plan,
noting that in the late-nineteenth century “roughly 75 percent of all males
over age 65 are working. If a male over age 65 is not working, it is likely
because he is disabled.” The footnote to the entry “1935—Social Security is
enacted establishing age 65 as the normal age” explains:

Age 65 was chosen as the age at
which Social Security benefits would begin for two reasons. First, the few
private pension plans that existed at that time used age 65. Second, half of
the 30 state pension systems used age 65 as the retirement age and the other
half used 70.

Bringing us into the present, the discussions about
retirement age aren’t just about “When can you afford to retire?” but also about
“When can the country afford to have you retire?” Several studies have explored
these questions. For example, the Congressional Budget Office published a 2004
study, “Baby Boomers’
Retirement Prospects: An Overview
.” About ten years earlier, it published a
similar study, “Baby
Boomers in Retirement: An Early Perspective
.” (Both are downloadable PDFs.)
In addition, the executive summary
of the 2009 Retirement Confidence Survey (by the Employee Benefit Research
Institute) offers the pertinent section, “Changing
Expectations about Retirement—Retirement Age
” (pp. 13-15). Finally, Federal
Reserve economists love to write about retirement. Type “retirement” into the
“Title,” “Subject,” or “Quick Search” box within “Fed in Print” to find a number of
papers that address different aspects of retirement timing.

The views expressed in this post are those of the author and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author.

Amy Farber is a research librarian in the Federal Reserve Bank of New York’s Research and Statistics Group.

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