Retirement in 1940 meant reaching the age of 65, the Normal Retirement Age (NRA), and filing the paperwork with the federal government as proof of employment contributions. As human longevity increased, the age for retirement also increased. Current retirement laws depend on your place of employment.
Federal laws prohibiting age discrimination protect employees from arbitrary retirement rules. The Age Discrimination in Employment Act (ADEA) governs federal, state, local and private company regulations to prevent age discrimination.
The Employee Retirement Income Security Act of 1974 (ERISA) sets standards for health and pension plans provided by private industry. ERISA contains penalties for violations. The enforcement of these laws depends on the philosophy of the political party in power. Some administrations use the ERISA as a platform to move change in the private sector, while other presidential administrations allow private hiring practices to remain unchecked due to lack of legal enforcement.
Retirement under Social Security can begin at age 62, but comes with reduced benefits. Full retirement age can be calculated using a chart and your birth month and year. Full retirement age at 65 is permitted for anyone born during 1937 or before.
Beginning with 1938, the full retirement age extends by two months. The last birth years on the official federal chart include people born in 1960 or later. This group must wait until reaching their 67th birthday to receive full retirement benefits.
If you elect to retire before your full, or normal, retirement age, your benefit is reduced by at least 20 percent. The scale of reductions increases by your age. The longer you wait to retire under the Social Security system, the greater your benefit payment will be when you retire.
Private firms establish their own retirement guidelines for workers. Federal guidelines are clear, but most private firms ignore the laws and set the mandatory retirement age using their own interpretation. Federal law allows workers to determine their own retirement age, with a few job exceptions. Law firms routinely set mandatory retirement ages when an attorney is hired and signs the employment contract,
The American Bar Association advised member law firms to end this practice in 2007, citing problems with this law and the conflict with federal employment law. The mandatory retirement policy underwent a legal challenge in 2010, when a firm was sued for discrimination based on the mandatory retirement policy.
The lawsuit, brought by the federal Equal Employment Opportunity Commission, challenged the firm’s policy as age discrimination. The federal agency won the lawsuit, but some law firms continue to enforce contracts with mandatory retirement policies.
Current mandatory retirement regulations apply to air traffic controllers and international pilots, as well as a number of small private companies and larger corporations that routinely set mandatory retirement ages.
The civil service and the federal employees retirement systems handle retirement for federal and public employees. Retirement for civil service workers is based on number of years of employment, age at the time of retirement and any special circumstances. This classification of workers is defined as jobs requiring special skills that decline with age.
Special mandatory retirement restrictions force air traffic controllers, firefighters and law-enforcement personnel to retire early and federal law allows this policy. Specific retirement rules also apply to workers leaving due to disabilities or involuntary discontinuation of service.
Regular civil service regulations allow worker retirement to begin at 55 with 30 years of service, but workers with special circumstances may retire at any age with 25 years of service.
The Federal Employees Retirement System (FERS) uses a chart to track age and the number of years of creditable service. Early retirement reduces the retirement benefits by the number of years under age 62, for workers with less than 20 years of service. Workers with at least 20 years of service may retire at age 60 with full benefits under the FERS. Some air traffic, firefighters and law enforcement workers use the federal law as the basis of career planning. The workers retire with 30 years of service and move into a second career in their early 50s. By the time the person retires, both retirement plans, for the two separate careers, provide a comfortable retirement check each month.
References
Social Security Online
U.S. Office of Personnel Management: Retirement Eligibility
American Academy of Actuaries: Issue Brief, October, 2002
Reference:
- CNN Money: Ultimate Guide to Retirement: money.cnn.com/retirement/guide/SocialSecurity_basics.moneymag/index8.htm
- Gallup: Americans’ Projected Retirement Age Continues to Creep Up: www.gallup.com/poll/127514/americans-projected-retirement-age-continues-creep-up.aspx
- Social Security Online: The Full Retirement Age is Increasing: www.ssa.gov/pubs/ageincrease.htm
