OVERVIEW

History of Retirement

WHAT WE KNOW ABOUT RETIREMENT
 

Predictors of retirement
Adjustment to retirement

Phases of retirement

Factors encouraging retirement
On Couples and Retirement

Gender differences

Baby Boom Impact/Trends

Five-year Trend Projections in 
Retirement Plans

SUMMARY

REFERENCES

Retirement 
Welcome to this section on retirement. How we plan for retirement, why we retire, and how we experience retirement years greatly influences how well we age. The success we perceive as we age depends in large part on the process of retirement.

How employment is experienced and perceived influences how retirement takes place. To learn more about employment, click work.

OVERVIEW

Most Americans view retirement as "no work and all play" -- a lack of activity, a rocking chair on a porch with the world passing by. By today's standard, retirement is a very complex issue. Ekerdt (1996) shows some of  this complexity with his identification of four types of retirement.

 1. Complete retirement from work

 2. Change of job

 3. Semi retirement with part-time work

 4. Work for oneself

Any of these four types of retirement may be an end goal, a transition, or in combination with each other.

The Busy Ethic: Ekerdt's "busy ethic" applies here. The current generation of older adults hold the work ethic in high esteem. The values and benefits of work cited in that section attest to the significance work holds for older adults. Hence, once retired, the older adult relies on activities and staying busy to create a new role and fill the time formerly taken by work. This serves to "justify" his or her retirement and insulate the retiree from feelings and accusations of lost skills and abilities. 

How one adjusts to retirement will influence the quality of life and how successfully an individual views the aging process. Understanding the complex factors and issues of retirement will add dimension to our understanding of what it takes to age successfully.

Retirement History and Projections:

  • There are a number of public actions that bear upon retirement.In 1884 Chancellor Bismarck set the arbitrary age of 65 years for retirement which was formalized with the Social Security Act in the U.S. in 1935. Reaching 65 years then was an exception. 
  • Mandatory retirement ended in 1977. 
  • In 1950 each Social Security beneficiary had 16.7 workers producing resources. Today there are only 4 workers per beneficiary. This is likely to decrease to 2.5 by 2030. 
  • Depletion of the Medicare Trust Fund is likely by 2010 and Social Security at 2030. 
  • Social Security Amendments of 1983 will extend retirement age from 65 to 67 by the year 2027, reduce early retirement benefits and increase credit for delayed retirement by 2007.  
    • (Atchley, 1999)
Retirement Facts We Know:
 
  • Health decline is related to age or previous health problems, NOT retirement 

  •         (Bosse, 1991)
  • Retirement may improve functional health by reducing the demands on the individual 
  • Widowhood in retirement, NOT retirement itself, may cause isolation 
  • Society now views retirement as an earned opportunity 
  • Leisure opportunities may be limited due to duties such as household work 
  • Most retirees do not feel economically limited 
  • The overwhelming majority of retirees do not relocate 
  • Differences in timing of retirement for spouses do not significantly affect the overall life satisfaction of retired couples 
  • Most couples today have both been employed before retirement 
  • In one third of households, only one spouse is retired while the other works 
  • Marital satisfaction does NOT appear to be significantly affected by retirement 
  • Some reassignment of household tasks occurs after retirement with more sharing of the responsibilities 
  • There is greater opportunity and time for couples to share activities 
  • Certain circumstances, such as parent care, children or grandchildren returning to the home, disability and widowhood are likely to change retirement lifestyles 
    • (Atchley, 2000)
Predictors of Retirement:
  • Many factors may prompt retirement by themselves or in combination
    • Satisfaction with work 
    • Individual's age 
    • Health of individual 
    • One's perception of how he/she will be able to adjust to retirement 
    • Social status before retirement 

    • (Atchley, 2000)
    There are many facets of an individual's life that will influence how satisfied one may be in retirement. Answers to the following questions may suggest how well one will adjust to retirement.
    • What choices or option does he/she have to continue working? 
    • In what kind of work was he/she engaged prior to working? 
    • Is there sufficient income to support retirement? 
    • What is the health status of the individual? 
    • What rewards did the employment give to the individual? 
    • How well did he/she prepare for and perceive retiremen
      • (Ebersole & Hess, 1998)
    Adjustment to Retirement:

    The way one adjusts to retirement has much to do with the circumstances surrounding retirement. Research has shown that if one is forced to retire (due to poor health or a down sizing of a company) he or she is likely to feel the job separation as a crisis and may be at greater risk for substance abuse, depression or suicide.
                     (Ebersole & Hess, 1998)

    To the contrary, the Kaiser Permanente Retirement Study found that those who planned for retirement and did so voluntarily, were found to be less stressed with fewer substance abuse problems and more likely to exercise regularly.
                      (Midanik, 1995)

    Phases of Retirement:

    Retirement implies inactivity to many, with no compensation and often intangible outcomes. For some, self esteem and pride wanes. For others value, expertise and relationships change.  In 1975, Robert Atchley identified seven phases of retirement that remain appropriate to understanding retirement.

    1. Remote:  There is anticipation with little planning for this future event.

    2. Near:  Preparation for retirement and some fantasizing about it occurs.

    3. Honeymoon:   A state of euphoria occurs with a testing of fantasies.

    4. Disenchantment:  There is boredom, depression and a let-down in general.

    5. Reorientation:  A more realistic and satisfactory lifestyle is explored.

    6. Stability:   Activities become a more more important part of the individual's daily life and routine.

    7. Fermentation:  There is a loss of role and/or return to work
    (Atchley, 2000; Ebersole & Hess, 1995)

    Brandeis University developed The National Policy and Resource Center on Women and Aging (NPRC). Through this effort they published many resources and conducted studies relative to women and retirement.

    Their research found that women of the cohort over 65 were less aware of financial matters, investments, and more likely to mistrust and not seek out help from financial planners. Their information on retirement plans were apt to come from family, friends or the media.

    "Itís never too early and never too late." The NPRC publishes a newsletter, The Women and Aging Letter, with many practical strategies for older women such as the following four tips for retirement planning:

    • Don't expect Social Security to do the whole job 
    • Control your finances and be prepared to adjust you plans through stages of life 
    • Invest early and keep saving 
    • Itís never too late to start
        • (NPRC, 1999)


    Resources relevant to retirement from the National Policy Resource Center include:

    • Women of Labor Speak Out on Retirement Finances, Health Care, and Caregiving 
    • Financial Challenges for Mature Women: Creating Financial Plans and Evaluating Financial Planners 
    • Women and Aging Letter 
    The resources above may be ordered through the following: or write to :
      Director of Publications
      Heller Graduate School
      MS35
      Brandeis University
      Waltham, MA 02254-9110

      Phone: (800) 929-1995

    Trends in retirement plans likely to occur in five years:
    • Greater investment choices for participants 
    • Increased employee communications 
    • More portability for employee job changes 
    • Greater simplicity in retirement plan design 
    • Supplemental plans for benefits beyond statutory limits 
    • Linkage of retirement plans to company financial performance 
        • (AARP, 1999)