When People Lived Till Only 40 or 50, When Did They Retire?

Life expectancy has increased tremendously over the last century and a half. In 1900, life expectancy in developed countries was only 40 to 50 (see table). Today it is close to or over 80 in developed economies.

I was curious about how the retirement age has changed over this time. To this end I found a few helpful documents and sites such as Gary Beene’s Retirement Information Centre. It would seem that in most of the 19th century, people worked pretty much all their lives, as long as they were physically able, death then following soon after. Many were self-employed at the time, working on their farms, for example. When the industrial revolution started in the late 19th century people became wealthier and social security during retirement started to become a viable idea. Among the first to get such privileges were war veterans. Retirement benefits were paid for just a few years (maybe 2-5 years) while people lived, as older people were deemed to be in an insufficiently healthy state to contribute to the workforce.

Going into the 20th century, not only have people survived to a much older age, they are also now much healthier during those older ages, as a result of vast advances in medical technology. Today, with retirement ages in the 60s and people living till the 80s, pension funding has gone haywire. Retirement ages have not kept up with increases in life expectancy. Retirement funding in a big way started during the last century, for generous pension benefits and proved unsustainable later because of both increasing life expectancy and lower interest rates.

A recent issue of Bloomberg Businessweek had an article that the Japanese are still working, at least part-time after formal retirement, not just for the money but because they are physically and mentally able and want to do something meaningful. We have seen a tremendous shift from the norms of the 19th century and the (different) norms of the early and late 20th century respectively. Surely, the way we look at work and retirement going forward will also have to undergo radical change.

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