Today the words “pension,” “retirement,” and “Social Security” are universally understood and many Americans even refer to them as “rights.” It wasn’t always so. In a fascinating post last week on bigthink.com, Joseph Coughlin discusses how the modern day social security and pension system arose largely from the Union Army pension offered to veterans of the Civil War.
The Union Army pension originally covered those injured in battle, but the program was gradually expanded and soon covered veterans who became disabled off the battlefield and allowed veterans as young as 62 to make a claim of “disability” simply as the result of old age.
Prior to the Union Army pension, the ability to “retire” was not a standard concept among American workers. Your average Joe worked until no longer physically capable and then relied on his children for care until he died. This was accepted practice and so the ability of Union veterans to claim benefits in old age was an incredibly novel and welcome concept.
The Union Army pension’s features made the program wildly popular and, as Coughlin writes, “By 1900, the Union Army pension was the most widespread form of assistance to older adults in the United States, paying out to a quarter of the population 65 and over and accounting for almost 30 percent of the federal budget.”
Today Social Security is a household word and its expenditures reached $768 billion in 2012, 20% of the federal budget. The size of these numbers shows just how firmly “retirement” is enshrined in the modern day political system. Yet the concept of retirement is evolving today almost as much as it was when the Union Army pension was first introduced.
Retirement = Right?
Workers are living longer than ever and demographics means that ever fewer workers are supporting ever more retirees. The recent financial crisis decimated many Americans’ savings and companys are switching in droves from defined-benefit to defined-contribution pension plans.
In short, the responsiblity of planning and saving for retirement is falling increasingly on the individual. We would do well to remember how new a concept retirement really is and be realistic in thinking that of it as a “right”. It can only be guaranteed where the resources exist to guarantee it and, in a world where governments or corporations live beyond their means, pensions and social security systems can and will be cut.