Population aged at least 65 years in 2005.
Retirement is the point where a person stops employment completely. A person may also semi-retire by reducing work hours.
Many people choose to retire when they are eligible for private or public pension benefits, although some are forced to retire when physical conditions don't allow the person to work any more (by illness or accident) or as a result of legislation concerning their position.[3] In most countries, the idea of retirement is of recent origin, being introduced during the 19th and 20th centuries. Previously, low life expectancy and the absence of pension arrangements meant that most workers continued to work until death. Germany was the first country to introduce retirement in the 1880s.
Nowadays most developed countries have systems to provide pensions on retirement in old age, which may be sponsored by employers and/or the state. In many poorer countries, support for the old is still mainly provided through the family. Today, retirement with a pension is considered a right of the worker in many societies, and hard ideological, social, cultural and political battles have been fought over whether this is a right. In many western countries this right is mentioned in national constitutions.
•
Retirement in specific countries
A person may retire at whatever age they please. However, a country's tax laws and/or state old-age pension rules usually mean that in a given country a certain age is thought of as the "standard" retirement age.
The "standard" retirement age varies from country to country but it is generally between 50 and 70 (according to latest statistics, 2011). In some countries this age is different for males and females, although this has recently been challenged in some countries (e.g., Austria), and in some countries the ages are being brought into line.[4] The table below shows the variation in eligibility ages for public old-age benefits in the United States and many European countries, according to the OECD.
Country Early retirement age Normal retirement age Employed, 55–59 Employed, 60–64 Employed, 65–69 Employed, 70+
Austria 60 (57) 65 (60) 39% 7% 1% 0%
Belgium 60 65 45% 12% 1% 0%
Cambodia 50 55 16% 1% 0% 0%
Denmark none 65 77% 35% 9% 3%
France 62* 65* 51% 12% 1% 0%
Germany 65 67 64% 23% 3% 0%
Greece 55 65 31% 18% 4% 0%
Italy 57 60 26% 12% 1% 0%
Netherlands 60 65 53% 22% 3% 0%
Norway 62 67 74% 33% 7% 1%
Spain 60** 65** 46% 22% 0% 0%
Sweden 61 65 78% 58% 5% 1%
Switzerland 63 (61), [58] 65 (64) 77% 46% 7% 2%
Thailand 50 60 ? ? ? ?
United Kingdom none 65 69% 40% 10% 2%
United States 62 67 66% 43% 20% 5%
Notes: Parentheses indicate eligibility age for women when different. Sources: Cols. 1–2: OECD Pensions at a Glance (2005), Cols. 3–6: Tabulations from HRS, ELSA and SHARE. Square brackets indicate early retirement for some public employees.
India
In India - there are three sets of pension benefits. They are really good although the value may have now eroded:
1. Gratuity - at the end of service @ of 15 days salary (basic only) multiplied by number of years of service.
2. Superannuation - Varies from company to company - good companies provide Group Annuity Schemes
3. Employees Providend Fund and Family Pension - Employee Contributed at 12 % of salary per annum.
Factors affecting retirement decisions
Many factors affect people's retirement decisions. Social Security clearly plays an important role. In countries around the world, people are much more likely to retire at the early and normal retirement ages of the public pension system (e.g., ages 62 and 65 in the U.S.).[10] This pattern cannot be explained by different financial incentives to retire at these ages since typically retirement benefits at these ages are approximately actuarially fair; that is, the present value of lifetime pension benefits (pension wealth) conditional on retiring at age a is approximately the same as pension wealth conditional on retiring one year later at age a+1.[11] Nevertheless a large literature has found that individuals respond significantly to financial incentives relating to retirement (e.g., to discontinuities stemming from the Social Security earnings test or the tax system).[12][13][14]
Greater wealth tends to lead to earlier retirement, since wealthier individuals can essentially "purchase" additional leisure. Generally the effect of wealth on retirement is difficult to estimate empirically since observing greater wealth at older ages may be the result of increased saving over the working life in anticipation of earlier retirement. However, a number of economists have found creative ways to estimate wealth effects on retirement and typically find that they are small. For example, one paper exploits the receipt of an inheritance to measure the effect of wealth shocks on retirement using data from the HRS.[15] The authors find that receiving an inheritance increases the probability of retiring earlier than expected by 4.4 percentage points, or 12 percent relative to the baseline retirement rate, over an eight-year period.
A great deal of attention has surrounded how the financial crisis is affecting retirement decisions, with the conventional wisdom saying that fewer people will retire since their savings have been depleted; however recent research suggests that the opposite may happen. Using data from the HRS, researchers examined trends in defined benefit (DB) vs. defined contribution (DC) pension plans and found that those nearing retirement had only limited exposure to the recent stock market decline and thus are not likely to substantially delay their retirement.[16] At the same time, using data from the Current Population Survey (CPS), another study estimates that mass layoffs are likely to lead to an increase in retirement almost 50% larger than the decrease brought about by the stock market crash, so that on net retirements are likely to increase in response to the crisis.[17]
More information tells of how many who retire will continue to work, but not in the career they have had for the majority of their life. Job openings will increase in the next 5 years due to retirements of the baby boomer generation. The Over 50 population is actually the fastest growing labor groups in the US. This might have something to do with the economy, or the fact that this generation is outliving any previous generation and needs a job to entertain them!
A great deal of research has examined the effects of health status and health shocks on retirement. It is widely found that individuals in poor health generally retire earlier than those in better health. This does not necessarily imply that poor health status leads people to retire earlier, since in surveys retirees may be more likely to exaggerate their poor health status to justify their earlier decision to retire. This justification bias, however, is likely to be small.[18] In general, declining health over time, as well as the onset of new health conditions, have been found to be positively related to earlier retirement.[19]
Most people are married when they reach retirement age; thus, spouse's employment status may affect one's decision to retire. On average, husbands are three years older than their wives in the U.S., and spouses often coordinate their retirement decisions. Thus, men are more likely to retire if their wives are also retired than if they are still in the labor force, and vice versa.[20][21]
Saving for retirement
Retired workers then support themselves either through pensions or savings. In most cases the money is provided by the government, but sometimes granted only by private subscriptions to mutual funds. In this latter case, subscriptions might be compulsory or voluntary. In some countries an additional "bonus" is granted una tantum (once only) in proportion to the years of work and the average wages; this is usually provided by the employer.
The financial weight of provision of pensions on a government's budget is often heavy and is the reason for political debates about the retirement age. The state might be interested in a later retirement age for economic reasons.
The cost of health care in retirement is large, because people tend to be ill more frequently in later life. Most countries provide universal health insurance coverage for seniors, although in the United States many people retire before they become eligible for Medicare at age 65. In 2006, Medicare Part D went into effect, expanding benefits to include prescription drug coverage.
On a personal level, the rising cost of living during retirement is a serious concern to many older adults.
Early retirement
Early retirement can be at any age, but is generally before the age (or tenure) needed for eligibility for support and funds from government or employer-provided sources. Thus, early-retirees rely on their own savings and investments to be initially self-supporting, until they start receiving such external support. Early retirement is also a euphemistic term for accepting termination of employment before retirement age as part of the employer's labor force rationalization. In this case, a monetary inducement may be involve
Life after retirement
Retirement might coincide with important life changes; a retired worker might move to a new location, for example a retirement community, thereby having less frequent contact with their previous social context and adopting a new lifestyle. Often retirees volunteer for charities and other community organizations. Tourism is a common marker of retirement and for some becomes a way of life, such as for so called grey nomads.
Often retirees are called upon to care for grandchildren and occasionally aged parents. For many it gives them more time to devote to a hobby or sport such as golf or sailing. On the other hand, many retirees feel restless and suffer from depression as a result of their new situation. Although it is not scientifically possible to directly show that retirement either causes or contributes to depression, the newly retired are one of the most vulnerable societal groups when it comes to depression most likely due to confluence of increasing age and deteriorating health status.[34] Retirement coincides with deterioration of one's health that correlates with increasing age and this likely plays a major role in increased rates of depression in retirees. Longitudinal and cross-sectional studies have shown that healthy elderly and retired people are as happy or happier and have an equal quality of life as they age as compared to younger employed adults, therefore retirement in and of itself is not likely to contribute to development of depression.
Many people in the later years of their lives, due to failing health, require assistance, sometimes in extremely expensive treatments – in some countries – being provided in a nursing home. Those who need care, but are not in need of constant assistance, may choose to live in a retirement home.
Retirement is the point where a person stops employment completely. A person may also semi-retire by reducing work hours.
Many people choose to retire when they are eligible for private or public pension benefits, although some are forced to retire when physical conditions don't allow the person to work any more (by illness or accident) or as a result of legislation concerning their position.[3] In most countries, the idea of retirement is of recent origin, being introduced during the 19th and 20th centuries. Previously, low life expectancy and the absence of pension arrangements meant that most workers continued to work until death. Germany was the first country to introduce retirement in the 1880s.
Nowadays most developed countries have systems to provide pensions on retirement in old age, which may be sponsored by employers and/or the state. In many poorer countries, support for the old is still mainly provided through the family. Today, retirement with a pension is considered a right of the worker in many societies, and hard ideological, social, cultural and political battles have been fought over whether this is a right. In many western countries this right is mentioned in national constitutions.
•
Retirement in specific countries
A person may retire at whatever age they please. However, a country's tax laws and/or state old-age pension rules usually mean that in a given country a certain age is thought of as the "standard" retirement age.
The "standard" retirement age varies from country to country but it is generally between 50 and 70 (according to latest statistics, 2011). In some countries this age is different for males and females, although this has recently been challenged in some countries (e.g., Austria), and in some countries the ages are being brought into line.[4] The table below shows the variation in eligibility ages for public old-age benefits in the United States and many European countries, according to the OECD.
Country Early retirement age Normal retirement age Employed, 55–59 Employed, 60–64 Employed, 65–69 Employed, 70+
Austria 60 (57) 65 (60) 39% 7% 1% 0%
Belgium 60 65 45% 12% 1% 0%
Cambodia 50 55 16% 1% 0% 0%
Denmark none 65 77% 35% 9% 3%
France 62* 65* 51% 12% 1% 0%
Germany 65 67 64% 23% 3% 0%
Greece 55 65 31% 18% 4% 0%
Italy 57 60 26% 12% 1% 0%
Netherlands 60 65 53% 22% 3% 0%
Norway 62 67 74% 33% 7% 1%
Spain 60** 65** 46% 22% 0% 0%
Sweden 61 65 78% 58% 5% 1%
Switzerland 63 (61), [58] 65 (64) 77% 46% 7% 2%
Thailand 50 60 ? ? ? ?
United Kingdom none 65 69% 40% 10% 2%
United States 62 67 66% 43% 20% 5%
Notes: Parentheses indicate eligibility age for women when different. Sources: Cols. 1–2: OECD Pensions at a Glance (2005), Cols. 3–6: Tabulations from HRS, ELSA and SHARE. Square brackets indicate early retirement for some public employees.
India
In India - there are three sets of pension benefits. They are really good although the value may have now eroded:
1. Gratuity - at the end of service @ of 15 days salary (basic only) multiplied by number of years of service.
2. Superannuation - Varies from company to company - good companies provide Group Annuity Schemes
3. Employees Providend Fund and Family Pension - Employee Contributed at 12 % of salary per annum.
Factors affecting retirement decisions
Many factors affect people's retirement decisions. Social Security clearly plays an important role. In countries around the world, people are much more likely to retire at the early and normal retirement ages of the public pension system (e.g., ages 62 and 65 in the U.S.).[10] This pattern cannot be explained by different financial incentives to retire at these ages since typically retirement benefits at these ages are approximately actuarially fair; that is, the present value of lifetime pension benefits (pension wealth) conditional on retiring at age a is approximately the same as pension wealth conditional on retiring one year later at age a+1.[11] Nevertheless a large literature has found that individuals respond significantly to financial incentives relating to retirement (e.g., to discontinuities stemming from the Social Security earnings test or the tax system).[12][13][14]
Greater wealth tends to lead to earlier retirement, since wealthier individuals can essentially "purchase" additional leisure. Generally the effect of wealth on retirement is difficult to estimate empirically since observing greater wealth at older ages may be the result of increased saving over the working life in anticipation of earlier retirement. However, a number of economists have found creative ways to estimate wealth effects on retirement and typically find that they are small. For example, one paper exploits the receipt of an inheritance to measure the effect of wealth shocks on retirement using data from the HRS.[15] The authors find that receiving an inheritance increases the probability of retiring earlier than expected by 4.4 percentage points, or 12 percent relative to the baseline retirement rate, over an eight-year period.
A great deal of attention has surrounded how the financial crisis is affecting retirement decisions, with the conventional wisdom saying that fewer people will retire since their savings have been depleted; however recent research suggests that the opposite may happen. Using data from the HRS, researchers examined trends in defined benefit (DB) vs. defined contribution (DC) pension plans and found that those nearing retirement had only limited exposure to the recent stock market decline and thus are not likely to substantially delay their retirement.[16] At the same time, using data from the Current Population Survey (CPS), another study estimates that mass layoffs are likely to lead to an increase in retirement almost 50% larger than the decrease brought about by the stock market crash, so that on net retirements are likely to increase in response to the crisis.[17]
More information tells of how many who retire will continue to work, but not in the career they have had for the majority of their life. Job openings will increase in the next 5 years due to retirements of the baby boomer generation. The Over 50 population is actually the fastest growing labor groups in the US. This might have something to do with the economy, or the fact that this generation is outliving any previous generation and needs a job to entertain them!
A great deal of research has examined the effects of health status and health shocks on retirement. It is widely found that individuals in poor health generally retire earlier than those in better health. This does not necessarily imply that poor health status leads people to retire earlier, since in surveys retirees may be more likely to exaggerate their poor health status to justify their earlier decision to retire. This justification bias, however, is likely to be small.[18] In general, declining health over time, as well as the onset of new health conditions, have been found to be positively related to earlier retirement.[19]
Most people are married when they reach retirement age; thus, spouse's employment status may affect one's decision to retire. On average, husbands are three years older than their wives in the U.S., and spouses often coordinate their retirement decisions. Thus, men are more likely to retire if their wives are also retired than if they are still in the labor force, and vice versa.[20][21]
Saving for retirement
Retired workers then support themselves either through pensions or savings. In most cases the money is provided by the government, but sometimes granted only by private subscriptions to mutual funds. In this latter case, subscriptions might be compulsory or voluntary. In some countries an additional "bonus" is granted una tantum (once only) in proportion to the years of work and the average wages; this is usually provided by the employer.
The financial weight of provision of pensions on a government's budget is often heavy and is the reason for political debates about the retirement age. The state might be interested in a later retirement age for economic reasons.
The cost of health care in retirement is large, because people tend to be ill more frequently in later life. Most countries provide universal health insurance coverage for seniors, although in the United States many people retire before they become eligible for Medicare at age 65. In 2006, Medicare Part D went into effect, expanding benefits to include prescription drug coverage.
On a personal level, the rising cost of living during retirement is a serious concern to many older adults.
Early retirement
Early retirement can be at any age, but is generally before the age (or tenure) needed for eligibility for support and funds from government or employer-provided sources. Thus, early-retirees rely on their own savings and investments to be initially self-supporting, until they start receiving such external support. Early retirement is also a euphemistic term for accepting termination of employment before retirement age as part of the employer's labor force rationalization. In this case, a monetary inducement may be involve
Life after retirement
Retirement might coincide with important life changes; a retired worker might move to a new location, for example a retirement community, thereby having less frequent contact with their previous social context and adopting a new lifestyle. Often retirees volunteer for charities and other community organizations. Tourism is a common marker of retirement and for some becomes a way of life, such as for so called grey nomads.
Often retirees are called upon to care for grandchildren and occasionally aged parents. For many it gives them more time to devote to a hobby or sport such as golf or sailing. On the other hand, many retirees feel restless and suffer from depression as a result of their new situation. Although it is not scientifically possible to directly show that retirement either causes or contributes to depression, the newly retired are one of the most vulnerable societal groups when it comes to depression most likely due to confluence of increasing age and deteriorating health status.[34] Retirement coincides with deterioration of one's health that correlates with increasing age and this likely plays a major role in increased rates of depression in retirees. Longitudinal and cross-sectional studies have shown that healthy elderly and retired people are as happy or happier and have an equal quality of life as they age as compared to younger employed adults, therefore retirement in and of itself is not likely to contribute to development of depression.
Many people in the later years of their lives, due to failing health, require assistance, sometimes in extremely expensive treatments – in some countries – being provided in a nursing home. Those who need care, but are not in need of constant assistance, may choose to live in a retirement home.