Compulsory Retirement Among aNewly Entitled Workers: Survey of New Beneficiaries
” 2 by VIRGINIA P. RENO*
A VARIETY OF OPINIONS surround manda- Other studies during the 1960’s utilized reports tory retirement provisions. It can be argued that from employers or pension plans to investigate compulsory retirement policies, together with the prcvalcncc of various types of retirement poli- pension plan coverage, tend to open up jobs for cies. A 1961 survey of plants employing 50 or younger workers while assuring some measure of more workers showed that those without pension earnings replacement income for the older mork- plans rarely had compulsory retirement ers who are forced to retire. Objectivity, predicta- provisions.2 Plants with pension plans were cate- bility, and ease of administration are also seen as gorized as follows : advantages of mandatory retirement at specified ages. On the other hand, arguments in favor of a Type of policy Percent flexible retirement policy focus on the iights of Flexible (no compulsory retirement age) __ 25 Compulsory retirement : I older workers to choose whether to work or retire At normal retirement age (age at which and or1 the costs to society of supporting in retire- workers are eligible for full pension) 42 j ment cxprrianccd workers who are willing and At age later than normal retirement age __ 16 Combination of above policies for different able to work. Proponents of flexible policies also categories of workers ______17 point out) that retirement benefit incomes usually fall considerably short of prcretircment earnings Another study, based on reports by private pen- lcvnls for the individual. 8 sion plans filed with the Department of Labor in The diverse concerns about compulsory rctirc- 1963,3 grouped pension plans and their partici- ment practices ~IV reflected in the provisions of pants in the following categories : the Age Discrimination in Employment Act of 1967, which makes it unlawful for nn employer to I Percent I Percent discharge an employer aged 40-64 solely on the of Type of retmment pohcy 1 mnslon 1 m&ad basis of age, unless such provisions are part of a 1 -plans 1 workers bona fide cmployce-bon&t plan. The law accepts No compulsory retirement provisions--: ______23 37 65 as thr age at which mandatory retirement is Compulsory retirement at stipulated age unless worker 1srequested or granted permission to con- tmue working-...------.------69 44 not, unlawful age discrimination. Automatic retmment at stipulated age without cx- ception-.--.-----_--...__------11 12 Past studies by the Social Security Administra- Combination of compulsory and automatic retirement tion showed an increase during the 50’s and early provisions for &fferent categories of workers.S--mm 7 7 60’s in the proportion of retired workers attribut- ing their retirement to compulsory retirement As the data show, some form of involuntary re- politics. Bctwccn surveys made in 1951 and 1963 tirement, policy usually accompanies pension cov- there was a rise from 11 percent to 21 percent in erage, although the specific provisions of such pol- the proportion of men aged 65 or older on the icies vary. beneficiary rolls who retired in the preceding 5 years because they reached compulsory retirement age.1 For women, the comparable figures mere 6 SURVEY OF NEWLY ENTITLED BENEFICIARIES percent and 10 percent, respectively. The Survey of Newly Entitled Beneficiaries * Division of Retirement and Survivor Studies, Office (SNEB), unlike the last two studies mentioned of Research and Statistics 1 Lenore A El)stein and Janet H. Murray, The Aged 2 Fred Slavick, Compulsory and Flexible Retzrement in Populatzon of the United States: The 19FS Soczal Becuraty the Amerzcan Economy, Cornell University, 1933, page 10. Survey of the Aged (Research Report No 19), Social 3 Department of Labor, TiLe Older American Worker: Security Administration, Office of Research and Statis- Age Discrwnination in Employncnt, June 1065, pages tics, 1967, table 85 27-29.
BULL!ilIN, MARCH 1972 3 above, derived information about compulsory re- Those cmploycd included 26 percent with benefits tirement from individual workers-practically all postponed, practically all of whom _ considered of whom were aged 62-65. The SNEB sample was themsclyes “not retired” at t,he time of the survey, drawn from social security records of persons ini- and 21 percent with payable benefits, most of tially awarded retired-worker benefits. Persons in whom considered themselves “partly retired.” The the sample were surveyed by mail questionnaire employed were asked : “1s there a compulsory re- within 6 months after they received their initial tirement age at your present job?” and ‘
Number (in thousands) Wago and salary workers on current job.---.-. 219 132 4 Under the retirement (earnings) test, $1 in benefits Reporting on compulsory retirement polieles... 205 124 Ii: was withheld for each $2 of annual earnings between ---- Total percent ______100 100 100 $1,680 and $2,880, and $1 in benefits was withheld for ------each $1 of earnings above $2,880, except that a wage With cx~mpulswy retirement age. ______No compulsory retirement age______E iii ::: earner could receive benefits for any month he did not Don’t know..--._-_-.---___------a a 8 earn more than $140.
4 SOCIAL SECURITY I I I jobs with compulsory retirement policies: for 36 Retlrement policy ) Total 1 Men IWomen percent. of the men, contrasted with 23 percent of Number (in thousands)* the women, a compulsory retirement age was Total.- ______specified on their most recent job. 1 Reporting on compulsory retirement policies... --- Total percent--.: ______100 100 100 --- Compulsory retirement age on current or last lob. 1; Compulsory retirement age on current Job--.- Compulsory retirement age on last job only.... 13 No compulsory retirement age on current or last job ______---;; Age for Compulsory Retirement Don’t know ______
Sixty-five is by far the most common compul- sory retirement age, for both men and women. AS Because their numbers are small the group of shown below, among newly entitled wage and sal- employed persons who recently left jobs with a ary workers with compulsory retirement provi- mandatory retirement age raise by less than 2 sions on their most recent job, two-thirds reported percent the proportion of all newly entitled per- that 65 was the age for mandatory retirement. sons who had worked under compulsory retire- ment policies in recent years. Only 3 percent of the small group who had Retirement age 1 Total 1 Men ) Women recently shifted from jobs with compulsory retire- Number (m thousands)* ment provisions reported a mandatory retirement Wrth compulsory retirement age on most recent Job______131 82 43 age earlier than age 65 on the former job. Seven- Reporting age for compulsory re- tirement ______126 85 41 ty-five percent reported that the retirement age --- Total percent ______100 100 104 had been age 65, and most of the others said it -____- Under 65______was 70. Clearly, mandatory retirement before age 65-______-_ __--__-_--- - __ 6: 6: 66____ -______--_ -_ 65 was very uncommon in the recent employment 67-______: 6%______7 i experience of the newly entitled workers. 69-m.______(1) 70-_ ------_- __ - _- _-_- _-- _- _- -- __ _- - - _- M (‘I 18 71 and over ______1 1
10 5 percent or less Compulsory Retirement and Pension Provisions
The second most common age for mandatory rei Pension coverage is usually present on jobs tirement was 70, with one-fifth of the workers with a compulsory retirement age, and conversely, reporting that age. Provisions requiring retire- jobs covered by a pension plan usually are also ment before ,age 65 were rarely present on the covered by compulsory retirement provisions. workers’ most recent job. Four out of 5 of the newly entitled workers with Workers who changed jobs within 5 years.- compulsory retirement policies on their most Since all newly entitled workers were at least recent job said they were covered by a pension aged 62, the current jobs of those still employed plan (table 2). The proportion was lower for could not call for compulsory retirement before women than for men: ‘72 percent compared with that age. For BULLETIN, MARCH 1972 5 TABLE 2 -Pension coverage, by compulsory retirement Women are clustered in just four of the seven pohcies on most recent job: Wage and salary workers mltially enthled to retired-worker benefits, July-December 1969 occupational groups-clerical and sales workers awards (33 percent), service workers (25 percent), opera- - tives (21 percent), and professional And technical Pension coverage and retuement pohcy Yi+qq&z -_ x-orkers (11 percent). Except for the professional Total and technical workers, women in the above occu- pations mere far less likely than men to have Number (in thousands) Wage and salary workers ______208 pension coverage or compulsory retirement poli- Reporting on compulsory retirement pohcies and pensIon coverage______185 cies on their most recent job. Women in profes- Total percent------..------m-JI 100 I loo sional and technical jobs come closest to equaling Compulsory retwsment age and pension coverage 25 16 Compulsory retuement age only ______6 6 men in the likelihood of having both pension cov- Pension coverage only ______Neither.-... ______:t erage and a compulsory retirement age. l3oth Don’t know ______11 types of provisions were reported by 44 percent of ’ With compulsory the women and 50 percent of the men in pyofes- retirement age sional and technical jobs; the proportions report- Number (m thousands)- ing pension coverage without mandatory retire- With compulsory retirement age______c_____ Reporting on 131128 8886 :i ment pr&isions were 12 percent and 17 percent, pensioncoverage ____.______------100 100 100 respectively. --__- Covered by pension plan ______----- 84 The mandatory retirement age for professional Not covered ______8018 I 15 I ;Fi Don’t know ______-____ 1 1 2 and technical workers is often later than that of I I other workers. For about one-third of these xvork- With pension coverage ers, compared with about one-fifth of the others with mandatory retirement provisions on their Number (m thousands) Covered by pension plan ______.______job, retirement is not required before age 70 Reporting on compulsory retuement pohc~s. (table 4). Total percent ______With compulsory retirement pohcles______No compulsory retirement pohcles______Im?ustry difere33ces .-Compulsory retirement Don’t know ______-___- - provisions are most prevalent in industries char- acterized by high rates of pension coverage: tirement policies and to have the benefits of pcn- Transportation, communications, and public utili- sion plan coverage. Service workers and laborers tics; public administration; and, for men, the mere the least likely to have either pension cover- manufacturing industries (table 5). Of these, the age or mandatory rctlrement provisions on their manufacturing sector is by far the largest, em- most recent job (table 3). ploying nearly one-third of the men and one- About half the men in professional and tcchni- foL;rth of the women. Within that sector, indus- cnl jobs and about a third of those in other tries producing nondurable goods employ the white-collar jobs and in skilled blue-collar jobs largest proportion of women and show the lowest report pension plan coverage accompanied by incldencc of compulsory I etirement and pension compulsory retirement policies. Among service plan provisions for both men and women. workers and laborers, only about one-sixth of, the In the remaining industry q-OLI~S, fewer than men had both pension coverage and compulsory half the men and fewer than a third of the retirement provisions on their job. women reported pension cove1 age or compulsory In each occupational group, about 5 percent of retirement provisions. The largest of these groups the men reported lack of coverage by a pension is the service sector, which employs about 15 por- plan, even though there was a compulsory retire- cent of the men and 40 percent of the women and ment age on their job. Pension coverage without spans a wide range of educational and other pro- compulsory retirement provisions was more fessional services, business, 1cpair, and personal common: About 25 percent of the craftsmen and service activities (including private household about 15 percent of the men in other occupations employment). Persons with compulsory retire- reported pension coverage but no mandatory re- ment policies on their jobs in this mixed group tir ement provisions on their job. (29 percent of the men and 24 percent of the 6 SOCIAL SECURITY TABLE 3.-Compulsory retirement policies and pension coverage, by occupation of most recent job: Wage and salary workers initially entitled to retired-worker benefits, July-December 1969 awards S ~rofeeonal Ma~nnadgers Pension cc~verageand retirementpohcy Total ’ I, technical proprietors I I n thousands) 3salaryworken.----.-.------n ,xm,-nmr\..l.n~~ mtirnmnnt poll&s and 258 20 26 34 59 54 30 30 _____-_-----___ 236 19 24 32 85 60 28 27 ---__ ------Total percent ______100 100 100 100 100 100 1w 1 ---- I-- Compulsory retuement age and pension coverage....-- 31 50 “: 30 36 “i 17 13 Compulsory retlrement age only ______5 6 6 6 PensIon coverage only. ______1: 2: Neither----.-----....------~------~------i: i”? 45 28 :s iii pon’t know (retirement age or coverage) ______10 4 7 7 17 14 Women Number (in thousands) Wage and salary workers ______208 23 69 3 44 53 Reporting on compulsory retu’ement pohc~es and 185 21 64 3 40 46 pensIon coverage ______.______I _---I.--- -___ Total percent ______100 100 100 100 -~ Compulsory retlroment age and pensloo coverage-..---- 16 44 27 Compulsory retirement age only. ______7 Pension coverage only. ______i : Neither ______------__ 56 “p 48ii Don’t know (retirement age or coverage) ______13 14 1 Includes those not reporting occupation women) account for about one-fifth of all wo:kers was compulsory at age 68. Workers in t,he service covered by such provisions. sector show the greatest diversity in mandatory The compulsory retirement age varies consider- retirement age : 54 percent reported compulsory ably for public and private industry groups. In retirement at 65, but 36 percent Gould not face the public administration group, &o-thirds of mandatory retirement before age 70. ’ / those covered by compulsor$ retirement policies e’ E did not face mandatory retirement until age ‘70 or older (table 6). Sixty-five was by far the most PERSONS AFFECTED BY COMPULSORY common compulsory retirement age in thk private RETIREMENT sector. The manufacturing industri& Employed about 4 in 10 workers covered by compulsory re- Since 65 is the earliest retirement age generally tirement policies. Eighty percent of these workers reported, many of the newly entitled workers would have faced compulsory retirement at age aged 62-65 had not reached compulsory retire- 65; most of the others reported that retirement ment age by the time of the survey. Some had TABLE 4 -Age for compulsory retirement, by occupation’ Wage and salary workers initially entitled to retired-worker benefits, July-December 1969 awards Prof;;lmal Masnnadger Age for compulsory retirement Total 1 CE?l Craftsmen Operatives Service Laborers techmcal propnetors sales workers Number (in thousands) WithReportingage-..--.-.------compulsory retirement pohczs ______---_____ 126131 21 , 12 2826 it ;i: :9 i -- -- Total percent ______100 100 100 100 100 100 loo loo -- 682 Ed 7: (9 71 7: 7: ei : i i 3 i 1: : 69-e______------I (9 2. 3: 2i 09 (‘) 26 15 70-.. ______- __ _ _ _ - - _- __ _ _ - __ - __ _ _- -_ _-- _-- - - - _- __ (92. (9,; 0” 7land oveT-.-.-----.....------1 2 1 2 (9 (9 1 1 I 1 Includes those not reporting occupadon. * 0 5 percent or lees BULLETIN, MARCH 1972 7 TABLE 5.--Compulsory retirement pohcies and pension coverage, by industry of most recent job: Wage and salary workers iuitlally entitled to retired-worker benefits, by sex, July-December 1969 awards Manufacturing Tr*“S- Fores- Min- Pg- Fl- “*“CC, Public Total * fLg- $F c$esm- corn: Pension coverage and retirement policy Wood, Food, muni- Trade ;;;;; Services ‘e;‘ sgri- s;f,“n”- Total metal, tet$s, reel Culture etc P$; c*g9 estate Men Number (in thousands) Wage and salary workers ______258 9 20 82 47 22 12 22 33 15 40 20 Reporting on compulsory retirement policies and pensioncoverage ______236 7 26 77 44 21 12 21 31 14 36 19 --- --_------__------Total percent ______IIXI 100 109 100 100 1W 100 100 100 100 100 100 ------I_-- -_-_-_-----I_ Compulsory retirement and pension coverage--..--.. 31 4 15 “; 47 :i 50 53 9 33 23 “: 2ey;;e;Compulsory coverage retirement only ______only ______5 : 2 6 6 9 2 5 1: __-______-____-______------i: 86 ii ii :i 2827 ii :4” i: :; 45 E Don’t know (compulsory retirement age or coverage) 10 6 9 8 11 5 8 9 11 4 12 13 Women Number (in thousands) Wage and salary workers ______208 48 14 28 6 6 41 9 82 10 Reporting on compulsory retirement policies and 185 44 l3 73 10 pension coverage______-- -- ~16~-5-2-.-31-2 -- Totslpereent....-...------100 100 103 loo loo loo 100 109 1M) 100 ------~ ------Compulsory retirement and penslon coverage.--...-- 1; 17 30 11 15 E ! 20 17 20 Compulsory retirement only ______Pension coverage only ______9 1: 6 0 8 7 8 i 7 1: Neither.----.-.-_.-.------.....-.-.--.-. 46 ii 1: E !T; ii 41 Don’t know (compulsory retirement age or coverage) z 17 17 9 13 * Includes those not reporting industry. 1 Based on less than 50 sample cases / stopped working before the mandatory retirement who were still employed and subject to compul- age on their last job; others were still employed sory retixement on their current job (tablc 7). and had not yet reached the compulsory retire- Thus, the total proportion’of newly entitled men ment age on their current job. in, ,wngo and salary jobs who &ght. ultimately The 36 percent pi the men who reported corn; face mandatory retirement would fall betweeil 9 pulsory retirement provisions on their most recent percent (those nlrendy retired atA the compulsory job comprised about 14 percent who retired before age) and 21 percent (those already retired plus the maudatory age, 9 percent who retired when those still subject’ to compulsory retirement on they reached the compulsory age, &d 12 percent their current jobs). i , * TABLE 6.-Age for compulsory retirement, by industry’ Wage and salary workers initially entitled to retired-worker benefits, July-December 1969 awards Manufacturing Tram- $=;;z “;;w porta- Finance, Age for compulsory retirement Total ’ “~iC~l-’ construc- Food, Chemi- cor%%“i- Trade lns~~:;IcB* Services .*EiE- t1on Total z%zp tet;es, cals,petrc~ &Ions. estate tration etc ’ lenm, etc utilities --______------Number (in thousands) With compulsory retire- ment age.------.-.--... 131 29 Reporting age______126 $1 : 2 ’ ii :i i :i : i 28 :i ___-~- ----Y-P--- Total percent ______100 (9 100 100 ml 100 100 100 100 loo 100 100 --- ~----__~ ---______--___ Under 65______65.- __ _ ------__ - _- - __ - _------2 1:; 5: 7: 7: 8;: 8! 7: 9: 9: 522 2 &i-67-- __ _ -_ _-- ___ _ - _------(3 1 7 (9) 2 68.-...--.-..---..------; 1:; 13 1: iJ ii 1 i i 69______------(3 (3 34 (9 4 (9 5 (9 3 (9 3 (‘1 1; (9 4 70._ _ _ - __ _ _ - _- __ - _- - __ - - - _- - - - 20 : 3: 6; 71 and over ______1 (3) (9 (7 5 (9 (9 (9 (9 2 4 1 Includes those not reporting industry. J 0 b percent or less * Not show” where base is less than 1,t’QO 8 SOCIAL SECURITY TABLE ‘I.-Compulsory retirement provlsions on most recent job, by employment status: Wage and salary workers initially entitled to retired-worker benefits, July-December 1969 awards Men Women Retirement pohcy and employment status Not Not Total employed Employed Total employed Employed I I Number (in thousands) Wage and salary workers on most recent Job______Reporting on compulsory retirement policies. ______I :: :: -- Total percent ______----______100 100 100 -- With compulsory retirement age.-. ______Stopped working- ______i; ...... -!1 Reached compulsory retlremcnt age______8 ...... :.: ..--. Stopped before compulsory age______19 . ..- -.- .---._. Noresponse-.-.-_------1 - _- __ _ - _- __ _ _ _ Stillernployed...... --~~--~~------~------~--~--~ ,----.._. --..- 17 Compulsory retirement at 65______- - -. . _-. - - . . Compulsory retwement 666%. ______.-....------.. i Compulsory retuement at 70 and over. ______--_..-_._..-_ i : .~.--..----... 6 No compulsory retirement age______41 69 65 Don’tknow...-..-..------8 8 12 z ‘s” 10 5 percent or less For 23 percent of the women, ma;dotory retire- half the men and a fourth of the women left jobs ment policies were in effect on their most recent which had provisions for compulsory retirement job : about 11 percent who retired before the man- (table 7), Those who said they had reached the datory age on their last job; 4 percent Tvho re- mandatory age ustially had claimed benefit’ enti- tired when they reached the mandatory age ; and tlement at age 65 (table 8). The larger groups, 7 percent who were subject to compulsory retire- who said they stopped working before the com- ment on their current job. The total proportion of pulsory age or who reported no compulsory age newly entitled women who might ultimately face on their last job usually claimed benefit entitle- compulsory retirement would therefore fall be- ment before age 65. tween 4 percent and 11 percent. It’ is tempting to draw comparisons between SNEB data and earlier survey results to see Retirement Benefit Income whether the rise in compulsory retirement provi- sions reported between the 1951 and the 1963 sur- Retirement benefit income includes social sccu- veys of the aged has continued. Unforttinately, rity benefits in addition to retirement pensions the unique sample design of the SNER survey from private group plans or from public retire- does not yield estimates of compulsory retirement ment systems covering Federal, State, or local rates comparable with those of the earlier cross- government employees, military personnel, or sectional surveys of the aged. The available data railroad workers. As shown earlier, jobs that have do suggest, however, no dramatic dillerence be- compulsory retirement provisions usually provide tween the rate of compulsory retirement among pension coverage under one of the above types of aged retirees in 1963 and the rate of actual and systems. Nearly three-fourths of the men and half potential compulsory retirement for the yom~ger the women who reached the mandatory retire- group of newly entitled workers in 1969. ment age on their last job mere receiving a pen- sion at the time of the survey (table 9). Those who retired before the mandatory age were as SELECTED CHARACTERISTICS OF THE RETIRED likely as those who reached it to be receiving a pension. Public pensioners were concentrated Newly entitled wage earners who hid’ stopped among those who stopped before the mandatory working or “retired” by the time of the survey age, reflecting the high rates of pension coverage account for about 50 percent of the men and and late compulsory retirement ages in the public nearly 60 percept of the women wage earners in sector. the SNEB sample. Most of these who had stopped Retirees who left jobs that didn’t have compul- working were early retirees. Of the retired, about sory retirement provisidns had much lower pen- BULLETIN, MARCH 1972 9 TABLE %-Age at entitlement, by compulsory retirement policies on last job: Wage and salary workers who stopped working and were imtlally entitled to retired-worker benefits, July-December 1969 awards Men I Women With compulsory retirement With compulsory retirement age on last Job age on last job Age at entitlement No No compul- Total ’ Compul- Total ’ “gTfr;” Reached %Kd sory retwe- *ory retire- Total ’ compul- compul- ment age Total ’ ’ compul- ment *ge sory retire- sory r&Ire- sory retire- sory retire- ment age ment sge ment cage ment age .- -- -- Number not employed (in thousands) ______. 126 22 35 48 121 30 8 .- _---- 60~--- _- _----___- .- 100 I 100 I 100 _- 100 I IOQI 100 62-64-q______. 77 62-..-----...-...-.------. 65 8 23 2 “6; 5377 “F 63_....----....---.------. 40 : E ; 1311 274 64_ _ _ - __ _ _ - - - _------. :“z 13 :: 13 65 and over ______. 18 24 62 65m______;i i :i 13 22 56 66andover ______, 3 3 6 5 2 6 - - 1 Includes those who did not know or did not report on compulsory retire- f Includes those who did not report whether they reached compulsory ment age. retirement sge sion receipt rates. Only a third of these men and encc in median amounts of retirement benefit TVtenth of the women received pensions in nddi- income between retirees with and those without tion to their social security benefits. compulsory retirement provisions on their former The pensions ‘usually available to persons who jobs. Men who retired from jobs with compulsory retire from jobs with compulsory retirement pro- retirement policies had a median retirement bene- visions make an important contribution to their fit income of $3,380, compared with $1,640 for retirement incomes. Earlier SNEB findings also men whose former jobs did not have such a policy show that pension recipients generally receive (table 10). For women, the comparable medians higher social security benefits than nonrecipients are $1,870 and $800, respectively. do.6 Both these factors contribute to the differ- As shown earlier, pension coverage along with compulsory retirement features are most common 5 Virginia P. Reno and Carol Zuckert, “Benefit Levels in professional and managerial occupations and of Newly Retired Workers,” SocaaZ Securatg BuZZetat~, July 1971 m skilled blue-collar jobs. Consequently, retirees TABLE 9 -Pension receipt, by compulsory retirement pohcies on last job: Wage and salary workers who stopped working and were imtally entltled to retu-ed-worker benefits, July-December 1969 awards Men Women With compulsory retirement With compulsory retirement age on I& job I I age on last job PensIon receipt No No Total 1 compul- Total 1 compul- %Kd aory retire- Reached si2c%d sory retire- Total ) compul- ment sge Total ’ compul- compul- ment sge sory retlre- sory retlre- sory retlre- sory retwe- ment sge ment sge ment sge ment age Number not employed Cmthousands) T&al ______:______Reporting pension receipt. _ :ii 6659 it 3”: -- --- Total percent ______100 103 ICQ 100 ---- Receivmg B pension ______74 ;3” 21 10 Pnvate ------_-_-___-____ ii it E 9 13 f :i it Pubhc ______14 17 2 5 26 : Both------.------(9 (9 (3 9. Not receiving ______4: 2; 27; 2: 68 7; 4: ,- 5: 4: , 1 Includes those who did not know or did not report on compulsory retire- retirement sge ment sge ‘0 5 percent or less. 2 Includes those who did not report whether they reached compulsory 10 SOCIAL SECURITY TABLE lO.-Amount of retirement benefit income! by compulsory retirement policies on last job: Wage and salary workers who stopped working and were initially entitled to retired-worker benefits, July-December- 1969 awards I- Me” I TVomen With compulsory retirement With compulsory retirement age on last job age on last job Amount of retirement No I I I No benefit Income compul- compul- sory retire- Total ’ Reached S$&p$ sory retlre- ment age Total ’ compul- compul- ment age sory retire- sory retire- ment age ment age _--/-----I I------Number reporting (in thousands) ______. 119 57 21 33 46 10: 27 8 18 54 100 100 100 100 1M) 100 100 100 100 Total percent ______-___--- .-___------I I Less than $1,909.______3 4 l,ooo-1,499--_------. ::: i l,Eclo-1,999.__--__------_-----. 19 15 2 :: 2,Mlo-2,499___--____-_-_-_-----. 6 8 2,500-2.999-_-_____------. : i :; 6 3,ooo-3,999__--__------. 4,m-4,999 ___-__-__-_------. 14 :: 5,000-7,499______-_-. :: 17 :i: ::18 7,5w-9,999_-___-_-______----. : 4 10,600or more.._------.---.--. 2 4” i Median amount ______. $1,180 1 S.Y.9801 $3,180 1 f&480 $980 $1.870 II, 760 - 1 Includes those who did not know or did not report on compulsory retire- retirement age ment age 8 0 5 percent or less 2 Includes those who did not report whether they reached compulsory , who left jobs with compulsory retirement provi- usually helped to lessen the financial impact of sions show higher preretirement earnings than do retirement for those who left jobs that had com- those without compulsory retirement provisions pulsory retirement features. For about half the on their former jobs. For men, median earnings men who left jobs with compulsory retirement were $7,880 for those with compulsory retirement provisions, retirement benefit income replaced at policies and $5,830 for those without such policies least 40 percent of their preretirement earnings on their former jobs (table 11). (table 12). For nearly half of those who left jobs Retirement meant a considerable income loss without compulsory retirement provisions, retire- for practically all of the retirees. Second pensions ment benefits amounted to less than 30 percent of TABLE Il.-Amount of last earnings! by compulsory retxement policies on last job, Wage and salary workers who stopped work- mg and were initially entitled to retired-worker benefits, July-December 1969 awards Men Women With compulsory retirement With compulsory retirement age on last job I I age on last job No No Total 1 compul- Total 1 compul- Reached “k3cs:d snry retire- %Kd sory retire- Total 1 compul- compul- ment age Total ’ compul- ment age sory retire- sory retlre- sory ietire. sory retire. ment age ment age ment age ment age Number not em loyed (1” thousan 8 s) -1 I I I- Total ______126 121 30 Reporting last earnings-.---. 112 97 25 t Total percent ______- 100 100 -----z---- 100 Loss than $l,ooO______- 4 l,cw-2,499 ______6 2,5fa3-4,999______-__--_-_ 6,ooo-7,499______i: 7,500-9,999______-_-____-_ 22 lO,cw-14,999______13 15,OCGor more--..---.-.-...--. 6 Median earnings______$6,760 $7,880 $7.880 I 1 Includes those who did not know or did not report on compulsory retire- retirement age. ment age * 0 5 percent or less. f Includes those who did not report whether they reached compulsory BULLETIN, MARCH 1972 11 TABLE 12.-Retirement benefit Income as a percent of last earnings, by compulsory retirement policies on last job: Wage and salary workers who stopped workmg and were initially entitled to retired-worker benefits, July-December 1969 awards With compulsory With wmpulsory retirement age retirement sge Earning replacement rate / No / 1 1 No (percent) compul- compul- Total ’ Reached sory retire- Total ’ Reached sory retire- compul- %Kid ment age compul- %Kd ment sge Total 1 sory retire- compul- Total 1 sory retlre- compul- ment age sory retire- ment age sory retire- I ment age ment sge iumber not em loyed (in thousan l?s) Total ______Reporting on retirement ‘---lit income and last rigs-----.------Total oercent ______ t&l-59-______- _- _- - - _- ______11 :t ::: W-69-______:: 12 10 70-79-______m-89- ______- __ - ______i i i ; w-99 __ _ _ _ - __ - __ _ - _- __ - _- __ _ _ - _ 100or more ______i i ; : ------____. Median ratfo (percent) ______ 1 Includes those who did not know or did not report on compulsory retire- 1 Includes those who did not report whether they reached compulsory ment age retirement *ge the amount they had been earning before they retirement I>rovisions were the least likely to have retired. wanted to retire when they did, and they had the highest incidence of health problems. Nearly 60 percent of these men and nearly 40 percent of the women said that they were unable to work Retirement Preference and Ability to Work regularly. Many of the compulsory retirees wanted to re- tire when they did, but more than half said they did not (table 13). Only about one-fourth of the SUMMARY men and one-sixth of the women who reached compulsory retirement age said they had health Of the 466,000 wage and salary workers ini- problems that would prevent them from working tially awarded retired-worker benefits in the last regularly. The good health enjoyed by most of half of 1969, 36 percent of the men and 23 pcr- those compulsorily retired and the income loss as- cent of the women reported a compulsory retire- sociated with retirement may help explain their ment age on their most recent job. Data from this reluctance to lcnve their jobs. survey confirm findings of past studies that com- Persons who left their jobs before they reached pulsory xetircmcnt provisions usually accompany the mandatory retirement age were the most pension plans and rarely exist in the absence of likely to have wanted to retire when they did. pension coverage. Compulsory retirement provi- The opportmlity to draw a pension before the sions in conjunction with pension coverage were mandatory retirement age may explain the high most common among professional and managerial proportion who retired willingly. Health prob- workers and skilled blue-collar workers. Sixty- lems often influenced their retirement decisions : five was by far the most common and generally 44 percent of the men and 21 percent of the the earliest age for compulsory retirement in the w-omen reported they were unable to work regu- private sector. Seventy was the most common larly. compulsory retirement age reported by employees Retirees whose jobs did not have compulsory in public administration. , 12 ’ SOCIAL SECURITY TABLE 13.-Retirement preferenceand ability to work., by compulsory retirement policies on last job: Wage and salary workers who stopped working and were initially entitled to retired-worker benefits, July-December 1969 awards Men Women With compulsxxy With compulsory retirement age I retlrcment sge Retirement preference and -I No 1 I No ability to work compu1- compul- Total 1 Reached sory retire- Total 1 sory retlre- “2cEd ::g$ %?Zi,” compul- ment age Total ’ compul- ment age sory retlre- sory retire- sory retlre. ment age ment age ment age Number not employed (In thousands) ______126 *eQ 22 35 43 121 x 30 8 20 62 -- ._---- ~~ Total percent ______100 100 100 loo 100 100 100 100 100 100 I .- ___--__- ii ii i: ii ii it ii I 2 6 4 6 2 3 - Number reporting on work Umltatlons (in thousands)--. I 34 47 114 28 I3 19 60 --- Total percent ______1M) 1W 100 100 100 1CQ 100 100 --- -- With work limitation ______31 Can’t work..-..-...-..-.--.. t: Can work occasionally ______ii 16 :: Can work regularly ______4 Not reporting. ______: 3” No limitation ______4: 56 09 1 Includes those who did not know or did not report on compulsory retire- * Includes those who did not report whether they reached compulsory ment age. retirement age At the time of the survey, the workers with Technical Note compulsory retirement provisions on their most recent wage and salary job consisted of three The estimates presented here are based on data groups. The largest was made up of those who from the Survey of Newly Entitled Beneficiaries, retired before the compulsory age (14 percent of which is one of the surveys undertaken by the the men and 11 percent of the women). Next in Social Security Administration to study the re- size was the group still subject to such provisions tirement process. Data collection and’ tabulation in a current job (men, 12 percent; women, ‘7 per- operations were conducted by the Bureau of the cent). Making up the smallest group were those Census. The selection of the sample from social who r&red at the mandatory age (9 percent and security records was performed by the Social Se- 4 percent). curitf Administration. Rctirccs whose former jobs had compulsory re- / tirement provisions usually had higher preretire- , ment earnmgs and better retirement iucome pros- Survey Design pects than did other retirees. Those who retired before the mandatory age were as likely as those Population.-The SNEB universe consists of who reached it to be receiving a pension. About all persons initially aw&ded retired-worker bene- three-fourths of the men in each group had a fits ,during each month between July 1968 and pension in addition to social security benefits. June 1970. ’ To receive an initial retired-,worker Pension income together with social security ben- benefit award, an individual must : (1) be at least efits amomlted to at least 40 percent of the prere- 62 ieaIs old; (2) have earned retired-wbrker in- tirement earnings for about half the men in each sured status from his own ‘ covered work group. Those who retired before the mandatory experience; and (3) have filed a claim to estab- age often had health problems that limited their lish his entitleme&. to .retired-worker benefits. ability to work, and most of them said they Disability beneficiaries, who& benefits are auto- wanted to retire when they did. Those compulso- matically converted to retired-worker benefits at rily retired were usually free of work limiting age 65, are excluded from the SNEB Universe. hewlth problems, and most of them said they did Synzple design.-The sample for SNEB was se- not want to retire when they did. lected by means of a two-stage design. Th,e first BULLRTIN, MARCH 1972 13 stage was the selection of a single primary sam- personal interview follow-up. This follow-up was pling unit (PSU) from each of 100 strata by conducted at the end of each calendar quarter. In appropriate probability procedures. The selection addition to all respondents whose incomplete of the PSU’s was made by the Bureau of the income reports were not corrected by telephone, Census as one of several combinations of the basic the follow-up included a 50-percent random sam- 357 PSU design of the Current Population ple of persons who did not return the question- Survey.’ Each PSU comprises a single county or naires or whose questionnaires were returned by group of counties (town or group of towns in the the Post Office as undeliverable. (For the Decem- View England States). Twenty-one of the PSU’s ber 1969 sample, only a 25-percent random sample used in the first stage consist of the counties com- of nonrespondents was selected for personal inter- prising the 21 largest metropolitan areas. Each of view.) Konresponse cases selected for personal in- these self-representing PSU’s is identical to its terview were weighted to include cases not chosen stratum. The remaining metropolitan areas were for the follow-up sample. grouped into 33 strata and one PSU (a single Xowinterwiew adjustment.-The personal inter- metropolitan area) selected from each stratum. view follow-up produced an effective response The remaining counties not in metropolitan areas rate of about 92 percent, after allowing for the were grouped into 46 strata, and one PSU was weighting of the follow-up cases (table I). To selected to represent each such stratum. meet the minimum acceptance criteria for an ade- The second stage of the sampling process was quate response, the sample person had to indicate the monthly selection of new beneficiaries to his employment status. If not employed, he had to whom questionnaires would be mailed. These are give a reason why he left his former job. The 8 individuals who had been awarded retired-worker percent lvho did not provide an adequate response benefits for the first time during the preceding include 6 percent who refused to participate in month and who resided in a sample PSU. the survey. #ample size.-The size of the SNIW sample In order to represent the nonrespondcnts, the was originally set at about 3,200 cases per month, originally assigned weights mere adjusted by mul- or 1 in 27 of the persons receiving retired-worker tiplying them by the reciprocal of the response benefit awards each month. From July through ratio. To allow for possible variations in response December 1969 the sample was reduced to about rates, this adjustment was ‘made ‘for 12 sex, rcsi- 1;500 cases per month. dencc, age-at-entitlement, ’ and ‘payment-status Data colZectioti.-Questionnaires were mailed to groups separately for each calendar quarter of sample persons by the end of the month following data. their benefit awards. A second questionnaire was mailed to persons who did not respond to the first mailing within 2 weeks. A third questionnaire Sampling Variability was sent by certified mail to those who did not respond within 4 weeks. These three mailings Since t,he SNEB estimates are based on a sam- yielded about a 75-percent response. The second ple, they may differ somewhat from the figures and third mailings were omitted for the Decem- that would have been obtained if every person ber 1969 sample to avoid overlap with the i97b initially awarded retired-worker benefits during decennial census. the last 6 months ‘of 1969 were included in the survey. In this survey, as in others, the results are Starting vith July 1969, mail responses were also subject to errors due to response and nonre- screened clerically for completeness of response to porting. income questions. About two-thirds of the incom- plete income reports were rectified by telephone The standard error measures the sampling vari- follow-up. The remainder were included in the ability of estimates-that is, the variations that occur by chance simply because a sample of the 1 For details on the Current Population Survey sam- population rather than the population as a whole pling procedures, a description of PSU’s, stratification, is surveyed. The chances ‘are about 68 out of 100 and selection of first-stage units, see the Bureau of the that an estimate from the sample would differ by Census, Tlbe Current Populatzon Survey-A Report on Methodology, Technical Paper Number 7. less than the standard error from the results 14 SOCIAL SECURITY TABLE I -Response before and after personal interview job had a compulsory retirement age. By interpolat- follow-up,1 July-December 1969 awards ing from table II, the standard error of this estimate is approximately 1.0 percent. The chances are 68 Before personal After personal out of 100 that if the whole population of initial interview Iollow-up * interview follow-up ’ awardees were surveyed this proportion would fall Status 01the questionnaire between 35 and 37 percent.. Furthermore, the chances Pey&w Pe$rc;age Number Number are 95 out of 100 that the proportion would fall bution butlo; between 34 and 38 percent. Total sample ______9,636 1CQ 9,636 ----- If it is necessary to compare two percentages to Questlonnsxes vvith ade- quate resporse ------6,953 72 8,829 determine whether they differ by a statistically Questlonnawes v.“,+h,M,t -II.“-” adequate response.....-- significant amount, the standard error of the dif- Undeliverable ______Deceased...... -.--..----- ference can be approximated as the square root of Refusal. ______Failed quabty check______the sum of the squares of the standard error of Mwellz------LILC”Ub-- ______Questionn.anes not returned. 1 2,25; “’ 23 1 each of the percentages. For example : * Does not reflect telephone and personal interview follow-up ofjnadequate income responses The proportion of the 241,000 men who reported on 2 After a manmum of three mallmgs for July through November and a smgle mailing for December. the presence of compulsory retirement policies on 8 Undehverable and nonresponse sample cases are welghted to include their most recent job is 36 percent and the com- casesnot chosen for the follow-up sample 4 Less than 0 5 percent parable proportion for women is 23 percent.. By inter- 5 E&mated polating from table II, the standard error of each proportion is approximately 10 percent. based on the same procedures for the entire popu- The sum of the squares of the two standard errors lation. The chances are about 95 out of 100 that is 2 0 and the square root, the standard error of the the differences would be less than twice the stand- difference is 1.4 percent Since the actual difference of 13 percentage points is much greater than twice ard error. the standard error of the difference, it is extremely likely that the difference is significant. i?&inaated percentages.-The standard error of TABLE II-Rough approximations of standard errors of an estimated percentage depends on the size of estimated percentages of persons or married couples (68 the percentage and the size of its base. Table II chances out of lOO), July-December 1969 awards presents a rough approximation of standard et= Estimated percentages rors of estimated percentages for the survey pe- Size of base riod July-December 1969. Linear interpolation 2 or 10 or 98 “9”; 90 applied to the base or the percentage or both may be used to calculate the value of a standard error 6,ceo____-__--_- 2.0 10,000____-_---_ 1 4 not specifically shown. For example : 25,CKW______&o,ooo-___---_-- 2 100,CCQ-__-_-_-- 150,ooO----_---- :: In table 1, of the 241,000 men who reported on the 200,ooo_-___-_-_ 250,cOo______-_ .i presence of compulsory retirement policies on their 3co,cn3l___~_~___ .3 most recent job, an estimated 36 percent said their EJJLLETIN, MARCH 1972