Retirement Through the Ages A History of Changing Times

Retirement was unheard of in ancient civilizations, where people typically worked until they were too old or ill to continue.

In ancient Greece and Rome, people often continued working well into their 60s and 70s.

The concept of retirement as we know it today began to take shape in medieval Europe, where wealthy landowners would often grant their servants and vassals a "pension" in exchange for their loyalty.

This early form of retirement was a privilege reserved for the wealthy and powerful.

The Industrial Revolution brought significant changes to the workforce, with many people moving from rural areas to cities to work in factories.

As a result, the concept of retirement began to shift, with many workers looking forward to a life of leisure after years of hard labor.

The first pension plans were introduced in the late 19th century, providing a small stipend to workers who had reached a certain age or had completed a certain number of years of service.

These early pension plans were often tied to specific industries or companies.

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The early history of retirement dates back to 13 B.C. when Roman Emperor Augustus instituted a pension program for Roman Legionnaires who served 20 years in the military.

This program was enacted to prevent an uprising against the Roman empire, but it marked the first recorded practice of people retiring and receiving retirement benefits. Emperor Augustus' program was financed by taxes and provided a decent amount for soldiers after 25 years of service, allowing them to retire as young as 42.

In ancient Rome, pensions for older people in need also existed, with churches having schemes for needy widows and monasteries providing for the needy.

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The Invention of Retirement can be attributed to Emperor Augustus, who instituted a pension program for Roman legionnaires in 13 B.C.

This program was enacted as a way to prevent an uprising against the Roman empire, not out of concern for the legionnaires' quality of life.

The first recorded practice of people retiring and receiving retirement benefits was established by Augustus' program.

It's interesting to note that the program was only available to legionnaires who served 20 years in the military.

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The concept of retirement dates back to 13 B.C. when Emperor Augustus instituted a pension program for Roman legionnaires who served 20 years in the military.

The Roman pension program was the first recorded practice of people retiring and receiving retirement benefits. Emperor Augustus wasn't motivated by quality-of-life concerns for his legionnaires, but rather as a way to prevent an uprising against the Roman empire.

Emperor Augustus' program paid a decent amount to soldiers after 25 years of service, so the retirement age could be as young as 42. This early form of retirement support paved the way for future innovations.

In ancient Rome, pensions were initially funded by local taxes or tithes, and later by donations. The system was not always fair, and coverage was patchy.

The New Testament Bible records the churches having schemes for needy widows right from the beginning. This early form of social support laid the groundwork for later retirement systems.

In the Middle Ages, monasteries often provided for the needy, but Henry VIII famously closed them and took their assets. This marked a significant shift away from communal support for the elderly.

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The Social Security Act of 1935 was a game-changer for elderly American workers, providing retirement benefits at the federal level. The official retirement age was 65, but the average life expectancy for an American man was just 58.

Pensions were first introduced by the American Express Company in 1875 as a way to create a stable workforce. This was a private pension plan, and it was the first of its kind in the US.

The 401(k) plan was created in 1978, allowing employees to defer income taxes on funds directed into retirement accounts. This plan has grown in popularity, with approximately three quarters of U.S. companies offering a 401(k) or similar plan today.

Pensions continued to be offered by more companies until around 1980, when they began to decline as companies introduced defined benefit plans, such as the 401(k). Today, fewer than 10% of large U.S. companies offer the classic defined benefit pension to employees.

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The rise of pensions transformed the concept of retirement, providing workers with a reliable source of income in their later years. This era is often viewed as the golden age of pensions, where the promise of a comfortable retirement was within reach for many American workers.

A recent article in Bloomberg highlighted the challenges retirees face with 401(k)-style retirement plans, including uncertainty about market performance and longevity.

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Retirement ages have changed over time, and it's interesting to see how they've been influenced by various factors. The Roman army model of retiring after 20 years of service still exists in some countries, including the US military.

The church scheme mentioned in the New Testament had a minimum age of 60, which is still the normal retirement age in many countries. The OECD reports the average age of retirement in their 38 member countries is just under 64 for women.

Life expectancy at retirement age is a crucial factor in calculating the cost of pensions. Australians now qualify for the age pension at 67, which is slightly older than the average age of retirement.

Retirement ages are rising to accommodate "population ageing", a longer life expectancy, and lower birth rates.

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The Post-War Boom was a significant period in the history of retirement. The economy was booming after World War II, and labor unions were gaining power.

This led to a substantial increase in the number of pension plans. Unions negotiated pension benefits as part of collective bargaining agreements, which was a major factor in the expansion of employer-sponsored defined benefit (DB) pension plans.

These plans promised workers a specific monthly benefit upon retirement, often based on salary and years of service. This was a major milestone in the development of retirement security for workers.

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Retirement became synonymous with golf, Florida, and leisure in the 20th century. The concept of leisure time was born, and people started to see retirement as a time to pursue hobbies and relax.

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In Canada, by 1950, life expectancy was higher than retirement age, meaning people could actually live out their post-work years. Average life expectancy in Canada was 67 years old, and the qualifying age for OAS was reduced to 65 from 70.

The onset of radio, film, and television made it easier for people to enjoy their leisure time. The number of golf courses in the United States tripled between 1920 and 1930, and golf became a popular hobby.

Here are some key statistics about retirement and leisure in the early 20th century:

As a result, people started to see retirement as a time to pursue their interests and enjoy their life. The idea of retirement as a time for leisure and relaxation became more widespread.