An Evaluation of Mandatory Retirement

Abstract

This paper discusses the issues raised by mandatory retirement, the meaning of the new law, the law's specifics, and the uncertainties still ahead. The new law, prohibiting mandatory retirement before age 70 in the private sector, and altogether for most federal employment, is in form an amendment to the Age Discrimination in Employ ment Act of 1967, or ADEA.

The pros and cons of mandatory retirement at any fixed age are reviewed, including the changing financial and demo graphic considerations affecting the retirement decision. The paper then discusses the likely effects of mandatory retire ment on employees and employers and on the composition of the work force. About 90 percent of both men and women have in recent years retired before age 65, and those few working to age 65 have generally stopped well before 70. Nevertheless, the sure opportunity to work to 70, and a developing perception of the great erosion of financial security caused by continuing substantial inflation, may well lead to significant shifts in retirement decisions. Uncertainties arise from the independent operation of state laws and the likelihood of extensive dispute requiring judicial resolution.