Retirement

Retirement is an economic-based term that traditionally refers to the ending of paid work, often signaling the end of one's professional or work career. In the United States, retirement is usually accompanied by the receipt of Social Security to provide income, Medicare to cover some health care costs, and private retirement accounts or pensions to supplement savings.

One basic aspect of the retirement process is the question of a retirement age. Two concepts must be the mandatory retirement age and “full” or “normal” retirement age. Issues of a mandatory retirement age center around changes in the Age Discrimination in Employment Act (ADEA). In 1967, passage of the ADEA addressed age-related issues in the workplace by preventing hiring and firing practices based on age. In 1978, the focus of the act expanded with an amendment to the ADEA preventing companies from enforcing mandatory retirement upon employees before they reached 70 years of age. More recently, [Page 788]in 1986, an amendment to the act prohibited companies from setting a mandatory retirement requirement based on age.

Due in part to ADEA legislation, the United States currently has no mandatory retirement age. However, the Social Security Administration (SSA) does set an age for entitlement to full Social Security benefits. The SSA uses the term normal retirement age or full retirement age to describe the age at which a person can receive full retirement benefits. Retirement before such age incurs a penalty and deductions, while retirement after such age offers increased benefits. According to the SSA, as of 2006, the normal or full retirement age is 65 years of age for those born in the year 1937 or earlier. For those born after 1937, the normal or full retirement age increases by monthly increments. For those born in 1960 and later, the retirement age reaches 67 years.