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GBIC >> Retirement >> History
Retirement History
Today, retirement is considered within the reach of virtually all able-bodied US citizens. Yes, there are lots of exceptions to this generalization but the number of people capable of retiring comfortably is undeniably on the rise. The majority of people who enter retirement still depend on Social Security as a major source of income, but even that dependency is decreasing. This is a much different story than was true only a century ago and there are several factors which explain the changes.

Pre-1900 1900+ Books & Literature

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Retirement is a fairly recent phenomenon. For most of history mankind worked until they were physically unable to work any more and death was typically not long afterwards. For those folks who could not work, family members were pretty much the only option for survival.

Certainly, there were always rich people who were the exception to this rule, but the vast majority of the world's population were not wealthy enough to consider retirement. This was particularly true for people who lived in the country and for whom tending to the farm and livestock were an everyday activity for their entire lives.

The early inventions of the plow and harness, which increased farmer's productivity greatly, were at the heart of liberating peasants from the farm and responsible for the growth in population which began to concentrate into cities.

Modern-day retirement has its roots in the city, where wealth was also concentrated. Whereas wealth in feudal times was controlled by relatively few families, wealth in the cities began to spread to greater numbers of people (still a small percentage of the population, but much greater than the numbers of feudal families that controlled the wealth in earlier times).

Throughout most of the world, retirement continued to be a rich man's game. But by the late 1800's in the United States, where the Industrial Revolution began to create enormous wealth, money began to find its way into segments of society that had never before had access to such wealth - not riches, but definitely better times. It was still a tough life for most people, but the numbers of people whose lives were comfortable, and who were bringing in excess money that could be invested, began to increase significantly.

Though a nation whose wealth was on the rise, the US was not the first country to create an old-age social security program. In 1881 Germany's Emperor, William the First, wrote to the German Parliament: ". . . those who are disabled from work by age and invalidity have a well-grounded claim to care from the state." Germany began their social security program in 1889, with a retirement age of 70 which was later reduced to 65.

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1900+ (US)

In the early 1900's the use of pensions for government employees began to spread. Military veteran were generally the first to receive pensions, followed by state and municipal employees by the mid-1900s. The number of retirees began to grow.

Even before the advent of Social Security in the US about 1940, an increase in the number of retirees was having a significant impact on the number of older men in the work force - dropping from about 75% (mid-1800's) to 50% (mid-1900's). Whereas retirement in the mid-1800's occurred late in life, included dependence on family, and lasted only a short time, modern retirement began to be characterized by financial independence and longer lives.

Many retirees (then and now) used Social Security as the primary source of income, but the numbers of people who were able to supplement Social Security through savings was on the rise.

The most significant factor that increased the number of retirees was the increase in wealth of most citizens. The ~$4K average income of the early 1900's gave way to an average income of about $28K in the late 1900's. This greater income, plus growth in privately funded pensions, created a tremendous increase in the number of people able to fund retirement, albeit with a continued dependence on Social Security.

As the US population grows and the Social Security funds face greater pressure, many US citizens are beginning to expect reductions in available benefits, if not outright elimination, and are working towards fully self-funded retirement.

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Retirement Books & Literature

Most information about retirement in prior years is found embedded in books about history. There are relatively feed books or articles dedicated exclusively to the history of retirement around the world.

The following books are available and are devoted to the topic of retirement:

  • History of Retirement
    William Graebner (1980)
  • The Evolution of Retirement: An American Economic History
    Dora L. Costa (1998)

There is also some fairly good information on the web.