Work and Retirement

Gero 300

Chapter 13

Nov 2008

Introduction

• Retirement is a social institution to move older workers out of the work-force in a systematic manner without causing undue economic hardship and to solve the problem of an aging labour-force.

• Historically this was a “step-down” and an informal process. Assets were passed through families and families understood they had to care for the elderly. For those with no assets there was always the work-house and poor law.

• People worked until they could no longer fulfill their responsibilities, or move to less onerous work to match capacity.

Industrial era

• Retirement became institutionalized as part of the life course. State played a larger role in people’s lives. Exits from the labor force stopped being at the discretion of the individual. The structure of work-places became age based and reduced discretion of the individual

• Old Age Pension Act in Canada 1927-social assistance with a means test. Led to Old Age Security Act 1951 as a universal pension plan. These moves made retirement a possibility for the older worker.

• Management established cut-offs and 65 became the norm. Matched with wear and tear theory of aging. Older workers became de-skilled and mandatory retirement was introduced.

Pensions and Retirement

• For the wealthy retirement continued to be ad hoc• Women were still felt to be dependent on men for

retirement income, as their place was “in the home”• After the 1930 Depression experience, the OAS of 1951

became universal, flat rate, financed and administration operating on principles of social insurance. Private pension schemes developed after WWII. See bottom page 332-333 on participation rates.

Pensions

• OAS gradually increased benefits and lowered retirement ages until 1970 when retirement was pegged at age 65. CPP was added as a second tier system in 1965 as a compulsory contributory plan with benefits linked to waged labor. GIS was introduced in 1966 for those who did not qualify for the CPP. The third tier of pensions includes personal savings and assets and private pensions. RRSP’s was initiated in 1957

Retirement

• Retirement studies (2002) show 49.7% of women retire early, 22.6% men at 65. Fig 13.2 page 335 shows the changes over time to 2004

• Extent of retirement-see pages 334-335• The median age for males to retire is now

dropping.• Women in the labor force from 1970 show each

successive cohort staying in the labor force longer. Women are still playing pension “catch up” with men.

New Retirement

• Life course is still uniform but more variable in timing, longer and less predictable. Retirement now includes: second careers, continuing education, volunteerism, and less definable stages. Retirement may not be chronological and is filled with multiple pathways. It can gradual and with multiple exits. This leads to variability in the age of retirement. Many Canadians are not sure when they would retire.

• Two new routes include retirement packages and care-giving. Disability benefits are another route to early retirement. These are sometimes used to remove older workers from the labor force

New Retirement

• 22% of Canadians reversed their retirement and returned to the labor force into “bridge” jobs, citing financial need, not liking retirement, missing work. These were often professionals, in good health. 30-50% of retirees do so through partial retirement.

• New terms: See page 339-340• Explaining retirement-There is now no common

definitions. There is usually some rite of passage (See movie “About Schmidt”). New roles emerge and old ones relinquished.

Theories

• Micro and Macro-very few theories link these two perspectives.

• Micro-Disengagement -(normal, mutual, beneficial. Activity-break in healthy activity needing to be replaced following withdrawal from work. Continuity-retirement created discontinuity which had to be replaced with other forms of social activity.

• All three assume individual was responsible for quantity and quality of level of activity. Missed the important influences of social, political and economic factors, and many take no account of race, culture or social class.

Theories

• Macro-Modernization and Age Stratification. Retirement facilitates the decline in status of aged in modern society-lower income, lower status, intergenerational competition-unidirectional evolution towards modernization. Stratification sees life as a series of roles linked by age. It is a role that applies to a cohort of people with age as the main criteria for entrance and exit. Too static and again overlooks race, gender and social class. See page 341

• Alternative Theories-read section on page 342-343-Bridging, Political perspective and Critical Theory.

• Link of Work and Retirement-status maintenance. Levelling or Redistribution (page 343)

Work and Retirement

• Retirement is a critical threshold that can increase inequality and is subject to issues of accumulated benefits and the relative importance of differences in income. Read pages 343-345

• Who retires when and why?

• Growing diversity as to when people retire, it may define societal perceptions of what is old and lays the foundation for economic well-being. Unmarried men often retire before 65, as to those with higher incomes, and sectors where jobs are stable. The levels of women’s incomes often decreases her age of retirement and should be related to marriage and enconomic security

Who Retires

• Family, orientation and # of children have direct impact on retirement behavior. Unmarried, higher personal income tend to retire earlier. Children reduce probability of early retirement.

• Foreign born have a lower rate of early retirement

• Those who return to work after retirement tend to be better educated, higher occupational status, self-employed, married men and single women and people in good health. The factor most closely associated with late retirement is higher education. In 2001 1/5 seniors with university education vs 1/20 with grade 9 or less. Women with the same education are less likely to be working

Health vs Wealth

• Due to compression morbidity, health should no longer be a reason for early retirement. Illness and disability most important reasons for early retirement followed by personal choice, mandatory policies, and feeling old. Early retirement can have dramatic impact on yearly income.

• Read section on timing of retirement-pages 348-350. Early retirement to some is unemployment (page 351)

• Read section on Family Approach to Retirement (pages 351-353

Living in Retirement

• Retirement preparations-41% of Canadians made no prep for retirement (1990) Those retired paid off debt, built up savings, contributed to RRSP’s. Those in better health make more plans. Those with jobs with intrinsic enjoyment and positive social relations less likely to plan for retirement.. Model for retirement planning has five factors-nature of labor force, biographical pacing, financial resources, spousal issues, org location.

Living in Retirement

• Read section on Involuntary retirement and Partial retirement page 354

• Stages-Continuity theory-honeymoon-disenchantment-readjustment-re-orientation-stable and ultimately death.

• Men-withdrawal, compensation and accommodation• Women-decision to retire, relinquish professional

identity, re-establish order

Well-Being in Retirement

• Well-being inversely related to length of time retired• Measure of satisfaction differ-loneliness, depression,

happiness, life satisfaction lower scores than those working. Health and Wealth-retirees lower stress levels, no difference on mental health or depression, self-esteem did not decline, anxiety levels steadily decreased.

• 18% of Canadians reported they were better off financially while 30% said they were in worse financial conditions. 52% said they were about the same.

Well-Being

• When marital support disappears, women’s secondary poverty affects overall well-being. Married and single women have better incomes in retirement than divorced or widowed women.

• Wealth is therefore subject to changing socio-economic conditions.