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Will Retirement be Forced to Retire in America?

Updated on December 16, 2017
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Through his travels and reading, Chris gathers information and writes about historical events and concepts which are often overlooked.

David Letterman, Late Show with David Letterman, Retired May 20, 2015


"The Greatest Retirement Crisis In American History"-Forbes

"The Greatest Retirement Crisis In American History." The article that followed this Forbes headline went on to describe the coming catastrophe of retirement in America. When I first saw that heading to the Forbes article, I felt a bit of panic rising in my gut. Then I began to wonder how long we as Americans have actually been retiring from work. As I researched, I learned that retirement in America is a relatively young concept. Somewhere between 1935 and 1940 we tipped the scale where 50% of American workers were covered by pension plans provided by their employers. That is only a 73 year history out of the 237 years that our country has existed. So I pushed the reset button on my panic attack and started looking more deeply into the whole idea of retirement.

Jay Leno, Tonight Show With Jay Leno, Retired May 29, 2009

Jay Leno should know a thing or two about retirement.  On February 6, 2014, he will make his second attempt at retirement.
Jay Leno should know a thing or two about retirement. On February 6, 2014, he will make his second attempt at retirement. | Source
Private Pensions
Social Security
401k Style Plans
Life Expectancy
% Working Over Age 65
1850 and earlier
4% of population over age 60
1st PP established by American Express Co.
13 PPs in US
*Age in () = how much longer one could expect to live if still living at age 65
300 PPs covering 15% of workforce
SS enacted with age 65 as normal retirement age
4.1 million workers/15% of workforce covered by PPs
9.8 million workers/25% of workforce covered by PPs
SS amended; early retirement at age 62 for women
18.7 million workers/41% of workforce covered by PPs
SS amended; early retirement for men at age 62
26.3 million workers/45% of workforce covered by PPs
The Revenue Act of 1978 established 401k style plans with pre-tax contributions
35.9 million workers/46% of workforce covered by PPs
SS amended; normal retirement age changed to age 67
39.5 million workers/43% of workforce covered by PPs
11.5 million workers/13 % of workforce covered by 401k style plan
40.1 million workers covered by PPs
60.4 million workers are covered by 401k style plans
20% of workforce covered by PPs
43% of workforce covered by 401k style plan
Men-74*(81); Women-79*(84)
13.7% of population over age 65
20% ages 65-69; 5% age 70+

Relief workers during the Great Depression, 1938

Relief workers at Annerley during the Great Depression, 1938 Line of unemployed male relief workers at Annerley in 1938, towards the end of the Great Depression. They are dressed in long pants and long sleeved shirts, and most wear hats.
Relief workers at Annerley during the Great Depression, 1938 Line of unemployed male relief workers at Annerley in 1938, towards the end of the Great Depression. They are dressed in long pants and long sleeved shirts, and most wear hats. | Source

Observations about Retirement in America

The following paragraphs are observations based on the above chart about the history of retirement in America.

1. A Dramatic Shift in the American Mindset About Retirement

Notice the column in the table titled "% Working Over Age 65." From 1850 and earlier, 77% of American men worked beyond age 65. If they were not working, it was likely that they were disabled. By 2011, 20% of American workers worked beyond age 65 and only 5% worked beyond age 70. This reveals the dramatic shift in the national thinking about retirement over the period of a century and a half.

2. The Initial Cause of the Nation's Change in Attitude Toward Retirement

What drove this change in attitude about retiring verses working in old age? Notice the column in the table titled Private Pensions. These were pension plans developed by private employers to attract and retain workers. These vehicles also enabled employers to more humanely remove older employees who were less productive. As the number of pension plans offered by employers rose, the number of people working beyond age 65 decreased. It was the employers need to attract and retain workers that changed the nations thinking about retirement.

3. From Forced Retirement to the "Right" to Retire

Early pension plans were designed by employers to remove older, unproductive workers. The idea of mandatory retirement took hold and seems to have focused on the age of 60. These workers were considered to be worthless while workers between 40 and 60 were tolerable. The ages of 25 to 40 were thought of as the golden years for workers.

The motivation to provide retirement has changed over the years. Early on, it was provided to remove unproductive, older workers. That progressively changed so that today retirement via a pension/Social Security is expected, even considered a fundamental right.

4. The Crisis for Pension Plans

Notice the column in the table titled "Life Expectancy." When the first pension plan was introduced by The American Express Co. in 1875, people weren't expected to live beyond about 40 years. So when this company offered a pension plan to workers over 60, they weren't offering it to very many people. As the years went along, life expectancy rose steadily. In 1850 less than 4% of the population was over age 65. Today 13.7% is over age 65. This means that pension plans have been progressively providing for more and more retirees who live beyond age 65.

FDR Signing the Social Security Act, 1935

 President Roosevelt signs Social Security Act, at approximately 3:30 pm EST on 14 August 1935. Standing with Roosevelt are Rep. Robert Doughton (D-NC); unknown person in shadow; Sen. Robert Wagner (D-NY); Rep. John Dingell (D-MI); Rep. Joshua Twing
President Roosevelt signs Social Security Act, at approximately 3:30 pm EST on 14 August 1935. Standing with Roosevelt are Rep. Robert Doughton (D-NC); unknown person in shadow; Sen. Robert Wagner (D-NY); Rep. John Dingell (D-MI); Rep. Joshua Twing | Source

5. The Crisis for Social Security

This same issue is playing out in the Social Security program. It was introduced in 1935. At that time, the average life expectancy was 60 years of age. By 2006 the average male was expected to live to age 74 and the average female to age 79. This means that over the years, more and more people were collecting Social Security simply because people were living longer. That is one of the things that has caused Social Security to begin running out of money. The Social Security plan has had to evolve to remain solvent. One strategy was to allow people to retire at age 62 with reduced benefits or at age 65 with full benefits. This occurred for women in 1956 and for men in 1961. The other strategy was to raise the normal retirement age from 65 to 67. This went into effect in 1983.

6. Personal Responsibility to the Rescue: Personal Retirement Accounts

Notice the column titled "401k Style Plans." These were put into place so that employees could contribute pre-tax dollars into a personal retirement account and was first introduced in 1978. As these plans grew in popularity, both with employers and employees, the number of conventional pension plans decreased. In 1990, 39.5 million workers (43% of workers) were covered by a conventional pension plan and 11.5 million (13% of workers) were covered by a 401k style plan. By 2006, 20% were covered by a conventional pension while 43% were covered by a 401k style plan.


As we look at the above information, it becomes clear that retirement as we have known it for seventy plus years is about to change dramatically. There are simply too many people retiring to expect pension plans and Social security to foot the bill.

Personal savings will become the backbone of the retirement plan of most Americans, and this at a time when we are also in the midst of a crisis of personal and national debt. We will be forced as individuals and as a nation to deal with the problem of debt even as we deal with the issue of retirement.

[Late addition] Have we come full circle? Before the first pension plan by American Express in 1875, nobody retired unless they were disabled. People took care of themselves. Family took care of family. From 1919 when pension plans began to become popular, to 1935 when Social Security was created, to the 1980s before personal retirement accounts really caught on, only 60 years had passed. Since the early nineties, the emphasis has shifted to personal retirement accounts. Aren't personal retirement accounts simply us taking care of ourselves just like people did before pension plans and Social Security? Pension plans and Social Security seem to have been a little blip on the radar of time, and now they are going bankrupt. Personal responsibility has been the story for the rest of human history. That little part of the twentieth century when we tried to make society in general responsible for the retirement of every individual may have simply been a really bad experiment.


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    • Availiasvision profile image

      Jennifer Arnett 

      6 years ago from California

      I'm 27 and not planning on getting a dime from the government. On the contrary, I plan on taxes rising and having to give more money to the government as I age. My personal plan is simple living, financial asset accumulation, and investing in dividend paying stocks.

      My generation needs to step it up and start saving NOW! We watched our parents retire with Social Security and think that we will have it that easy too. Not so!

      There is hope. Some of us are being fiscally responsible. They need to start saving now or they will be homeless and eating canned tuna. Even worse, if the state of the government is as bad as I believe it to be, and the state of the dollar likewise, my prediction is that 1/4th of us, those unprepared, will die of starvation caused by a monetary crash and drought. The future may not look bright, but if everyone would stop buying luxuries and start building a sustainable society, we have a shot of getting through this.

      Great Hub and very informative.

    • cam8510 profile imageAUTHOR

      Chris Mills 

      6 years ago from Traverse City, MI

      homer, thanks for visiting HubPages and reading my article. It sounds like you are being aggressive at providing for yourself during retirement. Good for you. You are fortunate to have work that you enjoy and that you can do into your seventies.

    • profile image

      homer rugburn 

      6 years ago

      Appreciated your article. I intend to work well into my 70s if health allows because I thoroughly enjoy my work. I am making financial plans on my own, and my employer pays into a few plans. I do not expect SS to hold out, and at 54 I do not plan to use it. There are many factors to consider in my situation. This was insightful.

    • aviannovice profile image

      Deb Hirt 

      6 years ago from Stillwater, OK

      Let's face it, we did have money coming out of our paychecks for the purposes of retirement. We can make deductions a little heftier and stop paying past presidents and members of Congress what they feel is due them. Wouldn't that make more sense and keep the money where it really belongs?

    • cam8510 profile imageAUTHOR

      Chris Mills 

      6 years ago from Traverse City, MI

      Hi Christine, I could not agree with you more. The SS money was never intended to leave that fund, but it did and now there is a crisis. I appreciate you stopping by and commenting. Have a nice weekend.

    • Christine Ballano profile image


      6 years ago from New Port Richey, Florida

      I agree in some ways. When the government created Social Security it should have been set up of individual accounts and the investment growth would have given us each a nice retirement fund void of government intervention. No matter how you look at it,; it is money that we contributed for our with the belief that it would be for our retirement. The Politicians and/or government entities had no right to remove those funds for their or any other use. What they are really covering up is there reckless spending and abuse while in office.

    • cam8510 profile imageAUTHOR

      Chris Mills 

      6 years ago from Traverse City, MI

      Mary, you are so right. We didn't ask for it, we didn't break it, but we most certainly will pay the consequences for it's demise. Social Security has been around for only 78 years and it is just about ruined. Thanks for reading and commenting, Mary. I really appreciate your visit.

    • tillsontitan profile image

      Mary Craig 

      6 years ago from New York

      While it is "our own fault" for relying on Social Security, it is surely the way of the land. If our wonderful politicians hadn't squandered Soc. Sec. money it might not be in the mess it is in. That being said, the young today had better be putting money aside and hoping whatever plan or bank its in doesn't collapse and take away their money!

      Fortunately or not, I'm already retired but I feel for those in their forties and fifties now!

      Very well written and more than worth reading!

      Voted up, useful, interesting and shared.

    • cam8510 profile imageAUTHOR

      Chris Mills 

      6 years ago from Traverse City, MI

      Shahkar Khan, working for oneself is the ideal. Thanks for a very insightful comment.

    • cam8510 profile imageAUTHOR

      Chris Mills 

      6 years ago from Traverse City, MI

      Kathi, maybe the most significant social change has been the breakdown of family ties. We may be forced by the economy into taking care of our aging relatives. Nice to see you here, Kayhi.

    • shahkar-khan profile image


      6 years ago

      Retaining a young professional by giving him sham incentives regarding retirement funds and dumping old experts by a time frame redlined from the inception of employment is a kind of 'camouflaged employee abuse'.

      This is the very reason why i prefer self-employment. You get retirement at your own will and nobody can retain you simply by deducting a portion of your current salary (as in the case of funds).

    • Fossillady profile image


      6 years ago from Saugatuck Michigan

      Great article Chris, the graph really puts it into perspective! Before the industrial revolution people worked until they were no longer able, but families were less divided then. Ma and Pa were taken care of by their off spring. It'll be interesting to see how it all plays out! Life is never dull!

    • cam8510 profile imageAUTHOR

      Chris Mills 

      6 years ago from Traverse City, MI

      Mel, In sports, when things start going badly, it seems that a common strategy is to get back to the basics of the game. I think it's time for American citizens to get back to the basics of life. The California crisis sounds serious. Thanks for mentioning it and thanks for the visit and comment. I appreciate it.

    • Mel Carriere profile image

      Mel Carriere 

      6 years ago from San Diego California

      Fascinating stats. Seems that this is only becoming an issue as people live longer, and I just heard a radio report yesterday the impending Baby Boomers retirement crisis might bankrupt California. Great hub!

    • cam8510 profile imageAUTHOR

      Chris Mills 

      6 years ago from Traverse City, MI

      Hi Rebecca, we all want to live longer, so our expectations will need to change. I appreciate your visit and wish you a happy weekend

    • cam8510 profile imageAUTHOR

      Chris Mills 

      6 years ago from Traverse City, MI

      Jamie, good luck with your return to school. Itis the smart approach to this issue. Thanks for sharing.

    • cam8510 profile imageAUTHOR

      Chris Mills 

      6 years ago from Traverse City, MI

      Ruby, it seems to me that a lot of folks are resigned to the belief that there will be little or no money left in government or private programs for our retirements. Too bad they won't let us keep the money we pay into these programs so we can save for ourselves. Thanks for the visit and comment.

    • rebeccamealey profile image

      Rebecca Mealey 

      6 years ago from Northeastern Georgia, USA

      Voted interesting and useful as well. It makes one wonder what the future holds as far as numbers go for retirement and life expectancy. I recently heard on a radio show about a 90 something-lady who was told she was running out of what was due to her. Scary!

    • jhamann profile image

      Jamie Lee Hamann 

      6 years ago from Reno NV

      This is important information here that needs to be read by all, so I am sharing all over the place. I have given up on retirement, instead of saving money that I cannot afford to save, I am going back to school to find a less strenous course of work to do until I die. NO ONE is going to help me out in this country, even after working everyday since the age of 17. Jamie

    • always exploring profile image

      Ruby Jean Richert 

      6 years ago from Southern Illinois

      This was interesting. I was unaware when soc. sec. started. In my opinion, we better have enough stashed away to take care of ourselves. It looks like we are on the brink of really hard times, maybe worse than the great depression. Great article...

    • cam8510 profile imageAUTHOR

      Chris Mills 

      6 years ago from Traverse City, MI

      Bill, does it appear to you, as it does to me, that we've basically come full circle? Are we really in that much of a different place than we were before the 20th century? We're back to taking care of ourselves and not relying on government. And i feel that is how it should be. Thanks for reading and taking time to comment.

    • billybuc profile image

      Bill Holland 

      6 years ago from Olympia, WA

      Great research on this one my friend. Fascinating the changes that have happened. We are taking the personal responsibility approach. I have zero faith in my political representatives, so we'll take care of ourselves in our remaining years. :)

    • cam8510 profile imageAUTHOR

      Chris Mills 

      6 years ago from Traverse City, MI

      Thanks Ann, As I approach the age of retirement, I have to look at my resources. My personal focus is on debt reduction as much as on saving. If I go into retirement owing nothing to anyone, I will have a much easier time of it. Thanks for reading and commenting. Nice to see you.

    • annart profile image

      Ann Carr 

      6 years ago from SW England

      This is an interesting piece; I knew nothing about the system of retirement in the USA as it's different from Britain. Everyone has a state pension but it can be topped up with various work or private pensions (or Forces' pensions). However, there is a move to push us towards private pensions as the government seems to be running out of money to cater for the growing 'oldies' population. Trouble is, there is no incentive to save any more as interest rates are poor. We've worked hard, saved hard and get no return on our money which we thought would safeguard us. Those who haven't bothered and claim benefits are often better off! Great system, eh?! Great read, clearly & interestingly presented.


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