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The History of Retirement GrowtoRetire

The History of Retirement

History means knowledge acquired by investigation. It’s the study of past events, through evidence such as written documents, photos or other items that describe past actions.

The importance of studying the history of retirement is that we can learn from previous events, mistakes, or good options in a way that it may be used in the future. Even if you don’t use it, it’s always interesting to know how things occurred in the past.

This post is meant to be an ongoing job of describing past events throughout the world in the last centuries. It will be updated in future posts. Therefore I hope you enjoy and contribute with corrections or additions in the comment section.

A people without the knowledge of their past history, origin and culture is like a tree without roots.

Marcus Garvey

13 BC

Caesar Augustus, Emperor of the Roman Empire, offers Roman legionnaires a retirement package approximately 13 times their annual salary.

5 BC

Caesar Augustus (Roman Empire) establishes a special fund to pay retired legionnaires. Stops funding it from general revenues.

1592-93

During its 1592-93 session, Parliament (UK) established annual pensions for soldiers that were not to exceed ten pounds for “private soldiers,” or twenty pounds for a “lieutenant.”

1684

The first known civil service pension was awarded in 1684 when a senior Port of London official became too ill to carry on.

1700’s

1775: The Continental Congress, also known as the Philadelphia Congress, established pensions for the American colonies’ naval forces.

1776: The U.S. Congress established pensions for the U.S. Army.

1781: During the months leading up to the Battle of Yorktown (1781) Congress authorized the payment of a life annuity equal to one-half base pay to all officers who stayed in the service during the Revolutionary War.

1782: The Bank of North America, established by the Continental Congress, becomes the first chartered bank in the U.S.

1783: Due to financial problems that could arise from past promises (We never learn apparently) Congress converted the life annuities for Army officers to a fixed-term payment equal to full pay for five years.

1784: The state of New York charters The Bank of New York.

1800’s

1832: Every surviving veteran of the Revolutionary War received a pension equal to 100 percent of his base pay at the end of the war.

1855: First retirement plan for U.S. Navy personnel established.

1857: New York City establishes the first pension plan for disabled municipal police officers. Decades ahead of the federal government. It was the Police Life and Health Insurance Fund.

1868: Surviving veterans of the War of 1812 receive retirement pensions.

1875: American Express created the first private-sector pension plan in the United States.

1884: Baltimore and Ohio Railroad created a pension plan that provides up to 35% of pay to workers who retired at age 65 and that had worked for the company for at least 10 years. It was the first railroad pension established.
The Baltimore and Ohio Railroad (B&O) was the first common carrier railroad and the oldest railroad in the United States, with its first section opening in 1830.

1889:
Germany became the first nation in the world to adopt an old-age social insurance program in 1889 designed by Chancellor Otto Von Bismark. In 1881 Germany’s Emperor, William the First, in a letter to the German Parliament wrote: “…those who are disabled from work by age and invalidity have a well-grounded claim to care from the state.”
The retirement age first defined was 70 years old.

1900’s

1911: Massachusetts (US) establishes the first retirement plan for state employees. It was a Government Pension Plan ­for Teachers and State Employees.

1917: 85% of cities with a population of more than 100k and 50% of cities with a population between 30k and 50k had pension plans.

1920: The Civil Service Retirement Act, which became effective on August 1, 920, established a retirement system for certain Federal employees.

1928: The Monthly Labor Report says that pension plans for police and fire department personnel are “practically universal.”

1930: All federal workers have some form of pension benefits; also an increasing number of state and local government employees have pension plans.

1935: On Aug. 14, the Social Security Act, was signed into law by President Franklin D. Roosevelt. Thus creating a federal safety net for elderly, unemployed and disadvantaged Americans. The Great Depression that followed the crash of 1929 was a catalyst for the Social Security Act.

1939: There were amendments that added child, spouse, and survivor benefits to the retirement benefits authorized by the 1935 Social Security Act.

1961: On June 30, the Social Security Act is amended to allow men to receive reduced benefits at age 62.

1970: 26.3 million private sector workers (45 percent of all private sector employees) were covered by some kind of pension plan.

1974: on Sept. 2, the Employee Retirement Income Security Act of 1974 enacted. It’s a federal United States tax and labor law that establishes minimum standards for pension plans in private industry.

1975: Cost-of-living adjustments adopted for Social Security benefits. This was due to high levels of inflation that started in 1972.

1978: On Nov. 6, the Revenue Act of 1978 enacted, adding Section 401(k) to the Internal Revenue Code. It was later used to develop one of the primary tax-advantaged retirement savings vehicles in use in the United States.

1983: On April 20, the Social Security Act is amended to raise gradually the retirement age from 65 to 67 for individuals born after 1959. Also to make Social Security payments taxable.

1983: 40 million people are covered by private-sector pensions. This number would keep stable for almost 30 years.

1986: Tax Reform Act of 1986 enacted changing the contribution limit of 401(k)s from $30,000 to $7,000.

Year401(k) Contribution Limit
2018$18,500
2017$18,000
2010$16,500
2000$10,500
1990$7,979
1986$7,000
1982$30,000
1978$45,475

1990: 39.5 million private-sector workers (43 percent of all private-sector workers) are covered by a pension plan. Furthermore, 11.5 million private-sector workers are covered only by defined contribution plans.

2000’s

2006: The Pension Protection Act of 2006 (PPA) is enacted. This legislation provides for stronger pension funding rules, greater transparency, and a stronger pension insurance system.

The History of Retirement Pinterest GrowtoRetire #FIRE #Retirement #History
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Now I would like to ask for your contribution to this post. Thus enriching it with the important events that contribute to modern legislation and fiscal landscape of retirement.

It’s particularly hard to find history from other countries and regions. Therefore it would be an excellent addition for future updates of this post.

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About GTRetire

GTRetire is the founder of GrowtoRetire, a blog about financial independence and early retirement. Click here to learn more about starting a blog! Also, this post may contain affiliate links, please read the disclaimer for more info.

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