Retirement in Context: Taking a Closer Look at the Past

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Author

Deb Dupont
Assistant Vice President Workplace Benefits Research, Institutional Retirement
LIMRA and LOMA

March 2025

Retirement is big business, not just for the stakeholders and companies involved, but also for each and every one of us as individuals.

It’s a critical benefit and goal, and one that requires planning, strategy and expertise.

An entire industry has been built around retirement. From a financial services perspective, we have a complex network of products and players, operating within the workplace as well as in individual homes and financial planning/retail offices.

In terms of life’s milestones, retirement is, in the scheme of things, a relatively new concept. Consider the following quote from the New York Times — one of my favorites:

“In the beginning, there was no retirement. There were no old people.

“In the Stone Age, everyone was fully employed until age 20, by which time nearly everyone was dead, usually of unnatural causes. Any early man who lived long enough to develop crow's-feet was either worshiped or eaten as a sign of respect.

“Even in Biblical times, when a fair number of people made it into old age, retirement still had not been invented and respect for old people remained high. In those days, it was customary to carry on until you dropped, regardless of your age group — no shuffleboard, no Airstream trailer. When a patriarch could no longer farm, herd cattle or pitch a tent, he opted for more specialized, less labor-intensive work, like prophesying and handing down commandments. Or he moved in with his kids.”

“The History of Retirement, From Early Man to A.A.R.P.,”
The New York Times, March 21,1999, by Mary-Lou Weisman

Retirement is a by-product of the workplace and working life as we know it, both of which have changed dramatically over the course of even just our own U.S. history. We don’t have to go back to Biblical times to explore how different these are today than they were at our nation’s founding, when we were primarily an agrarian society, and work was mainly home- and family-based. And life spans were considerably shorter. Because work itself was different, retirement meant working less, or working differently, but likely was not the (more or less) complete withdrawal from a workplace that we experience today.

An industrial revolution brought an ensuing wave of immigration and the onset of manufacturing, factory, railroad and other types of centralized and “nonhome”-based work. “Going to work” meant actually going to work, not out into the fields or down to the store. A new economy brought new concerns, with worker productivity being a top priority. Additionally, in highly physical occupations, worker age became a significant issue.

In many ways, retirement was an “invention” of the industrial revolution.

The first private pension was introduced in 1875, mainly to get older (presumably less productive) workers out of the workplace and make room for younger (presumably more productive) workers.

Encouraged by favorable tax treatment (contributions not taxable to employers), pensions became prevalent, mostly in regulated, unionized industries, and state and federal government workplaces but, not at most smaller workplaces. Despite urban mythology, traditional pension coverage has never been universal, nor available to vast swaths of workers.

Social Security, introduced in 1935, was intended to incent older workers to retire and offer benefits to those not covered by pensions. It’s important to note that, at the time, the retirement age (65) was older than the average life expectancy (for men about 60).

Figure 1. Institutional Retirement in the U.S.: Key Moments

The last 80 or 90 years, with accompanying social changes (among them, women entering the workforce en masse … the Baby Boom … the dawn of the information age … more generations than ever before in the workplace, the onset of remote work … ), have brought more and greater changes to both the workplace and the nature of work. And by extension, they bring changes to the nature of retirement.

Our perceptions of retirement have also shifted, as our longevity increases and opportunities for activity, travel and engagement expand with new economic and social realities.

Now, retirement is something most look forward to, but it’s more of a transition than (as in centuries past) a seamless evolution of work. It’s an event, leading to a state of being that needs funding. That need is the foundation of what was in 2023 (per the Investment Company Institute), a $38 trillion industry.

It’s a highly regulated, highly visible industry and a foundational benefit in a growing number of workplaces. As traditional defined benefit pensions cover a decreasing percentage of workers, and defined contribution coverage expands throughout both private and public workplaces, individual workers are increasingly responsible for funding their own retirements. Employers, aided by financial advisors and the financial services and benefits industries, help them with defined contribution savings arrangements and a variety of benefits, education and financial wellness products and programs.

In fact, financial wellness — helping individuals address their holistic financial needs, both present and future — is today a benefits category of its own.

We are redefining retirement, even as I type. Whatever its shape, whatever the timing for an individual, whatever the experience, retirement needs planning, and most Americans need help with that. Our industry is poised to, and does, help. And at LIMRA, we are proud to aid the effort with the insights, information and data the industry needs to continue to innovate solutions to help consumers and employers face the evolving nature of work and retirement.

More Information:

For an extraordinarily well-written, tongue in cheek yet insightful history of retirement, I strongly urge you to take a look at the article I’ve cited: The History of Retirement, From Early Man to A.A.R.P. — The New York Times.

For a timeline of “eras,” and highlights of work and retirement in each, and a timeline detailing the history of retirement legislations, please visit LIMRA’s Institutional Retirement Reference Guide, at 2022 Institutional Retirement Reference Guide.