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posted on 09 May 2016

Retirement As We Know It Is A Modern Concept

from the Atlanta Fed

Retirement as we know it is a relatively recent phenomenon.

We didn't always spend the golden years traveling, gardening, and cycling. Even though average retirement ages have been inching upward since the mid-1990s, fewer than 20 percent of Americans age 65 and older today are in the workforce.

"The United States was quite a different place in 1880, when more than 75 percent of men over the age of 65 were participating in the labor market," Federal Reserve Bank of Atlanta research economist Karen Kopecky wrote in a 2011 research paper.

A graphic in Kopecky's paper illustrates that in 1850, only 20 percent of men 75 to 79 were retired. Of course, a smaller share of the population lived to 75 in the antebellum years. Even 100 years later, in 1950, nearly half of U.S. men age 65 and older were in the labor force, according to the U.S. Bureau of Labor Statistics. The share of senior men in the workforce fell steadily to 16 percent by 1990 before starting a gradual climb to about 19 percent today.

Men spend 50 percent more time retired today than in the 1960s

In the big picture, though, retirement has become a more significant part of a typical American life. In the United States, the median number of years men spend in retirement increased almost 50 percent between 1965 and 2003, from 13 years to almost 19 years, according to the National Research Council's (NRC) book Aging and the Macroeconomy. About half of these additional years were a result of living longer and half were thanks to retiring earlier, the NRC says.

Men appear to be using those retirement years to relax. Kopecky writes that men age 55 to 64 years spend about 19 percent more time on recreation than men age 25 to 54, whereas men 65 and older spend nearly 43 percent more time in leisure activities than men 25 to 54. (She focused her study on men because in the early years she studied, women made up a tiny percentage of the nation's workforce.)

Kopecky argues that a blend of cheaper and higher-quality leisure goods - entertainment, books, sports gear, travel, and so on - and rising real wages created the retirement culture that emerged in the 20th century. Those two forces, she writes, "have made the leisure-intensive retirement lifestyle more affordable, driving a rise in retirement."

Source

https://frbatlanta.org/economy-matters/annual-report/2015/profound-changes-in-store-for-labor-market

About the Author

photo of Charles Davidson

Charles Davidson is a Staff writer for Economy Matters

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