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Economic Perspective: Is Retirement New?

Economist Mike Walden


“Today’s program asks if retirement is new. Mike, most people look forward to retirement when they can relax more and enjoy their hobbies. But it wasn’t always that way. Isn’t retirement a relatively new phase in our lives?”


“It really is. Up until, really, the last two or three generations retirement really didn’t exist as a part of your life. Most people literally worked until they physically couldn’t, and if they couldn’t work they hoped maybe some family member would take care of them. Maybe they would have to use a charity, et cetera, in order to stay alive. The notion of some government money for retirement or a pension plan, those things didn’t really exist.”  

“So things have changed. Of course, the real starting point of this change was Social Security. The Social Security System was established in the 1930’s, and this was the first time the government said, “Hey, if you’ve worked the government is going to provide you with a relatively small amount of money to at least keep you alive and keep you going when you retire.”

“And we can see the impact that this has had on retirement in the sense that it’s estimated, there’s a new study that does this, it’s estimated half the retirements that occur between 1940 and 1960 would not have happened without the advent of Social Security. So it’s been the notion of having some income security. Some notion that you would have some income to live on when you stopped working that really allowed retirement as a phase of life to be created.”