Who Wants You to Retire?
Today I’ll meet with a couple of couples discussing their retirement dreams and the financial plans we’ve been putting in place to help get them to and through retirement, as it’s “meant to be”. My clients are successful in their careers and look forward to the next 1/3 or so of their lives enjoying the fruits of their labor. They really want to retire! But it wasn’t always like that. Historically speaking, the motive for engineering a retirement didn’t come from workers wanting to spend more time fishing, play more golf or enjoy winters on a beach. Workers didn’t even necessarily want out of their daily grind.
Going back a couple of thousand years, the Roman empire provided a pension to those that had served in their military. An 18th century New England Puritan minister, Cotton Mather, said that the elderly should be “pleased with the retirement which you are dismissed into”.
In the United States, the concept of retirement was not widely adopted until the Industrial Revolution. Imagine what work was like back then: harsh, physically taxing with long shifts and relatively unsafe conditions. Factory workers who were aging were seen to be slowing down the production of assembly lines, logged more sick days than their younger colleagues, and were taking up employment where younger and more profitable men could be working. Ultimately, it was seen that the older men staying in their jobs were causing the unemployment of younger men who had families to support. Many older workers were opposed to their own retirement. The Great Depression magnified this phenomena. How could this be solved? How could older workers be incented to leave? Answer: pay them enough to quit.
By the 1930’s, a plan was proposed by political activist Dr. Francis Townsend, known as the “Townsend Plan” whereby the Legislature would pay people over age 60, $200 per month to retire as long as they spent it quickly. The plan never took footing because analysts at the time said it would be impossible to finance. The Townsend Plan is said to be the catalyst for President Franklin D. Roosevelt to form a team addressing the retirement of older workers and ultimately, the Social Security Act of 1935 was enacted, taxing workers and their employers in order to fund retirements at age 65. Promoting the movement, First Lady Eleanor Roosevelt said "Old people love their own things even more than young people do. It means so much to sit in the same chair you sat in for a great many years." Still, many individuals would have rather stayed working.
In 1951, the Corning Company created a task force, addressing how to make retirement more attractive. It was observed that Americans did not appreciate doing nothing, and the culture of retirement began to be promoted as enjoyable.
It worked. People now look forward to and enjoy their retirement, as it is meant to be. I’m delighted to be a Wealth Management Advisor in this era, where I am on the side of the worker who wants to retire.
Sources: "The History of Retirement, From Early Man to A.A.R.P.", Weisman, Mary-Lou (1999), The New York Times, https://www.nytimes.com/1999/03/21/jobs/the-history-of-retirement-from-early-man-to-aarp.html
Robert L. Clark, Lee A. Craig, Jack W. Wilson (2003). "A History of Public Sector Pensions in the United States".
Social Security History https://www.ssa.gov/history/towns5.html
