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Whose bright idea was retirement anyway?Posted by Randy on: 2005-10-17 14:08:08 in category:
Retirement Headlines [ Print | Permalink / 0 Comment(s) ] Whose bright idea was retirement anyway? By Wendell Cayton--Money Master There's a great line in a Glen Campbell song where he laments that at this stage in life he has been told he is "too out of shape for Wranglers and too old for video." He did not seem to let that bother him when he set up shop in Branson, Mo., where he continues to entertain folks. According to Dr. William Osler, a prominent physician at Johns Hopkins University, Glen and I share a common characteristic - we are both utterly useless to society because we are over age 60 and are burdened with "inelastic" minds. Osler made his proclamation in 1905 - before AARP - otherwise he might be swinging from a tall oak tree. So, just whose idea was retirement anyway? In pre-industrial America, retirement did not exist. Some ancient Native Americans just moved on and left the old people behind if they could not produce. Our colonials were a bit kinder, viewing the elderly as a source of wisdom and valued for their skills and crafts. Mass production changed all of that as a worker came to be viewed as a cog in the assembly line that eventually would wear out and have to be replaced. As our society changed from a nation of craftsmen to a nation of industrial workers, we traded job and occupation for craft and vocation, according to author Mitch Anthony in "The New Retirementality" As life expectancies increased, it did not take long for older workers to become the object of discrimination by authorities like Osler. The way to get rid of the problem was to come up with some sort of mandatory retirement. This went hand in glove with the fledging labor movement which was struggling to organize workers. Unions quickly embraced the ideas of enforcing job security for older workers as well as providing for retirement and pensions. Some attribute the retirement age to German Chancellor Otto von Bismark, who, in the 1880s invented a pension scheme to remove old bureaucrats. He pegged retirement at 70, using the Biblical reference "threescore and 10 year," but eventually lowered it to 65 since few lived that long. The first union to offer pensions was the Pattern Makers League of North America in 1900, about the same time that American Express began selling the first private pension. In the early 1900s the pension movement had gained momentum in America. By 1920 more than 200 new pension plans were formed. Still only 15 percent of American workers were covered by pensions when the Great Depression hit. Faced with massive unemployment, President Roosevelt and his planners needed a way to put people to work. Their plan was simple - replace older workers with younger ones. New Dealers tested this theory with a railroad workers pension that compelled 50,000 older railroad workers to consider immediate retirement. This led eventually to the Social Security Act, which we now accept as an integral part of retirement. To encourage older workers to retire, Roosevelt promised them immediate benefits, despite the fact that they had paid little into the system. Hence the idea that younger workers contributing to the plan would fund the retirement of older workers. Wage freezes were in effect during the Second World War. Unions had little they could offer workers, so they bargained for greater pension benefits. Businesses liked the idea as contributions to the plans were tax deductible and future obligations were not realized on balance sheets. By this time the image of retirement had become indelibly etched in the American work force as an individual's rightful reward for his or her years of labor and loyal service. The opinions expressed are those of Wendell Cayton, a registered investment advisor in the states of California and Washington, and not those of any company with whom he is associated. He may be contacted at wma@wealth-mgt.net. Homepage For personal help planning for your retirement http://www.retirement-plan.us For web information about planning your retirement. http://www.retirement-retirement.com/category-20.php |
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