What is retirement?


Retirement is when someone chooses to permanently leave the workforce when they reach a certain age.

Retirement refers to the time in life when an individual chooses to permanently leave the workforce. In many countries, the retirement age is 65. Following retirement, these individuals will be subject to some sort of national benefits system or pension scheme to supplement their income. 

History of retirement 

Prior to the late 19th century, people were generally expected to work until they died – or at least until they were physically unable. It was not until 1889 that this started to change, when German Chancellor Otto von Bismarck presented a radical idea to the Reichstag: government-run financial support for older members of society – or as we know it, retirement.  

At that time, the life expectancy was just about aligned with retirement age. However, this is not uncommon. When social security was established in the United States in the 1930s, for example, life expectancy was only 58 for men and 62 for women – while the retirement age was 65. In other words, this system, and many like it, were set up so that people would work and pay their taxes for many years but would not live long enough to reap the benefits.  

Today, the retirement age in most developed countries remains at 65. However, demographics are changing – life expectancies are up, birth rates are down, and people are retiring earlier than ever before. As a result, many governments have attempted to push back the retirement age – but are often met with resistance from the public. While no one wants to have their retirement pushed, a solution must be found – and with people living healthier, longer lives it seems that elongating an individual’s working years may be the way forward.  

Recent trends in retirement 

An ageing global population 

According to the World Economic Forum, global life expectancy at birth for both sexes has improved from 46.5 years in 1950 to 71.7 years in 2022 – and is expected to rise to 77.3 by 2050. While this means that people are living longer and healthier lives, it also means that many pension systems are struggling. Within traditional pension systems, younger generations (typically the largest chunk of the population) work and pay taxes to support retirees (typically the smallest proportion of the population). However, as birth rates decline, there are less people to support what is now a disproportionately large ageing population.  

As pension systems and retirees around the world risk running out of money, many governments and companies have started implementing policies and programs that encourage and support employees in working longer. These range from offering demotions to less stressful or strenuous roles to providing re-education and reskilling opportunities and even creating apprenticeships schemes for older workers. Be that as it may, age discrimination continues to exist in the workplace. According to the BBC, over-50s are more than twice as likely as other workers to be unemployed for two years or longer if they lose their current job. As many older people are often pushed out of long-time jobs before they choose to retire, this is especially concerning and requires immediate attention.  

The risks of retirement 

In addition to potentially running out of money, those who retire early often put their social, mental and emotional wellbeing at risk. According to the University of Toronto Scarborough, retirement can be a deeply dissatisfying experience for many people – especially for those whose personal and work identities are intertwined. As social networks and daily routines collapse, retirees are more likely to experience increased levels of fatigue, stress, anxiety, depression and loneliness. The lack of mental stimulation that often goes hand in hand with retirement also means that retirees are more susceptible to cognitive decline. Therefore, while early retirement may provide a short-term boost to mental health, recent studies have shown that it may be detrimental in the long-term.  

Advantages of retirement 

  • After 40+ years of working, retirement may provide a much-needed break.
  • In theory, pension systems should provide retirees with enough funds to live comfortably for the remainder of their lifetime.   

Disadvantages of retirement 

  • Individuals that go into early retirement may risk running out of money.  
  • When people stop working, they increase their chances of experiencing cognitive decline.  
  • Retirees often feel isolated and lonely.