What is "retirement"?

Defining retirement

In the 1880s Germany’s Chancellor, Otto van Bismarck, created Europe’s first pension plan to provide state support and entitlements for old people considered too feeble to work. The age of entitlement was set at 65, at a time when average life expectancy was 45 (Dychtwald, 2005b). Prior to that, people worked until they died, and their roles in society changed to suit their skills, experience and fitness.

During the twentieth century, retirement came to be seen by some as a tool to remove older workers from the workforce into their “golden years” to make way for younger workers, particularly as the baby boom bulge moved through the workforce and put upward pressure on the job market. By the end of the twentieth century, retirement had come to be seen as a triumph of twentieth century prosperity and a “right”. It was a social benefit promised to reward workers for “decades of demanding and often unfulfilling labour” (Smith & Clurman, 2007).

At the same time, average life expectancy increased to the mid-70s (and higher for women). If the age of pension entitlement today were adjusted to take account of the increase in average life expectancy, it would be 70 instead of the current 65.

Today, retirement age varies across countries. In Australia, the traditional age at which retirement starts has been 55 (Quine & Carter, 2006). In Canada it is 60 (Statistics Canada, 2006). A third of American workers retire at 55, with the proportion rising to half by the age of 60 (Dendinger, 2005). In New Zealand, the Retirement Commissioner advises that there is no official retirement age, but the age at which Government superannuation begins to be paid (previously 60, currently 65 and subject to change) is generally taken to be the age of retirement.

Retirement can be defined as a “one time event that permanently divides work life from leisure” (Dychtwald, 2004); a “complete withdrawal from the workforce” (Dendinger, 2005); “complete and worry-free disengagement from the workaday world” (Smith & Clurman, 2007); to “step aside and let others take the reins” (Smith & Clurman, 2007); “to remove from view, withdraw from society” (Bogan & Davies, 2007). The word retirement carries connotations of deceleration and withdrawal from the world, a gradual wind down to death, or “waiting for God”. In the UK, Huber & Skidmore (2003) report that retirement is about “not working”, but say that, “to view it as the twilight of a career beyond which meaningful self-fulfillment becomes impossible is inadequate”.

While the New Zealand Retirement Commission does not have a set definition and considers there to be many options for older people, when called upon it will define retirement as “the situation where an employee permanently withdraws from the regular paid workforce” (Retirement Commission, 2008).

Smith and Clurman (2007) list the key elements of the traditional concept of retirement as “not working”; “pensioned” (living more frugally on savings or fixed pension); “maturity” (age, limitations and legacy); “surrender – stepping aside to let the next generation set the societal agenda”; and “closure”.

American gerontologist Dr Ken Dychtwald has described the concept of retirement as outdated, saying it “should be put out to pasture” in favour of new approaches to suit the changing work ambitions of both workers and employers (Dychtwald, 2004).

The “golden years” ideal of retirement required that older people be willing to step back and let the next generation take charge, and that the next generation be able to generate enough income to pay the cost of their elders’ retirement.