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wundayatta's avatar

Why do corporations have mandatory retirement ages?

Asked by wundayatta (58354 points ) September 16th, 2009

Is this age discrimination? Do you think mandatory retirement is a reasonable policy? If not, do you think legislation should be passed to make mandatory retirement illegal?

How old are you? What kind of work do you do?

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13 Answers

CMaz's avatar

It think it depends on the job.
There was a time when a majority of work was physical. The mind is willing but the flesh becomes weak.
Today, technology is making it that people can work just fine at their desk and at home.
Things are more mental then physical.

jrpowell's avatar

In certain situations. Airline Pilots should get the boot after a certain age. I don’t think it matters at Burger King.

whatthefluther's avatar

I think corporations have done considerable cost/benefit analysis and have determined that a mandatory retirement age makes sense from that perspective. At the corporation I previously worked for, scientist and engineer retirees that had something of benefit to provide were awarded consultant contracts, sometimes at seemingly exorbitant amounts of compensation. See ya….Gary/wtf

dpworkin's avatar

It’s to make room at the top for people who have been waiting for their promotions.

marinelife's avatar

In some positions it makes sense, especially those requiring physical skills and stamina.

I don’t think this should be a matter for legislation.

markyy's avatar

Because if they didn’t none of them would quit, we would have offices stinking like old men who don’t want to give up their drivers license job. Plus we need room for the younger generation. Guess which generation I belong to ;) sorry for the bias.

limeaide's avatar

Sounds like ageism to me. I didn’t know that existed or could exist. I think it’s terrible, if someone is capable and doing a good job who cares how old they are. If the work is physical or requires a certain amount of stamina and they can still do the job fine. Maybe a test or if they’re not performing the job well is a different story. To force retirement solely on age is wrong.

dalepetrie's avatar

Follow the money, that will always give you an answer. If all other things were equal, let’s say that the benefits of having an experienced person are offset by their slowing down or what not, look no further than insurance. Most companies that provide health insurance have to cover at least a significant portion of the employee’s coverage. For example, I’ve been in companies that covered all employee and all but $50 of spouse/family coverage a month, and the last place I worked used to cover 85% of employee and 65% of spouse/family, and when they had to cut costs (which didn’t work, the company was still forced to shut down), they asked me to find out what at minimum the company had to pay. The answer under my state’s laws was that the company had to cover at least 50% of the employee premium. Now, we have an age tiered plan, which unless you’re a really big company, makes a lot of sense. Someone in their 20s might pay, for the same insurance, say $250/month, that the person age 65 was paying $900/month for. Half of those numbers means $125 per month vs. $450 a month…85% of that (and 65% of a spouse who is probably the same age), comes out to be $1,350 a month, or $16,200 a year more just to cover that employee. And let’s say you don’t work for a smaller company w/ an age tiered plan, well then just about every single person on the plan is probably costing the company at least $300 a month, but if they don’t start forcing out old people, what happens at renewal time is that the company ends up getting a steep increase, because the insurance company paid out so much in claims (because of the high cost of medical care for older people), that they didn’t make a large enough profit. And of course, if the company pays any sort of pension, there is even MORE of an incentive to force the older people out of their jobs, because the benefits start to increase exponentially with each additional year they work.

Consider today’s market vs. the market 50 years ago. 50 years ago, loyalty was valued, people would work at the same company forever, and they rewarded their employees with huge incentives to stay on board. Now, time to pay the piper…pension costs for retired employees is the only reason GM’s cost per employee is double that of its foreign competitors on average. And do companies value loyalty anymore? Well look at how many permanent employees are laid off each year to have their jobs outsourced to someone who doesn’t even work for the company, and you’ll have your answer.

Just like drinking, sex, smoking, driving and other things we place concrete ages on, retirement is really something that not every single person becomes ready for at the same time, yet our society insists on uniformity. So, because there’s an expectation that you retire at whatever age Social Security kicks in, if you don’t, people will question your motives.

Now to answer your other questions…I’m 38, and hell, I’d retire tomorrow if I could. My dad retired at 60 and my mom at 62, and my mom could have gotten more money by staying put for a while, but she was finally ready to go at one point and figured no point in dragging it out. I would say that allow conditions to dictate…if your job requires that you do x, y and z, and you can not do x, y and z, whether it’s about your age or a disability or anything, if you can’t do the job, then you shouldn’t have it. But if you’re 95 and still plugging away, even if you’ve worked the same place for 70 years and they’re paying through the nose for you, if you’re doing a good job, why should you be forced out of it?

YARNLADY's avatar

It doesn’t sound legal to have without some specific reason for it. Age discrimination is against the law.

Darwin's avatar

I know that my dad, once he became vice president of a major corporation, was subject to mandatory retirement at age 60 unless the board voted to keep him on (which they did for several years until he insisted on retiring because he wanted to start a new career). I believe the reason was that it gave the board a chance to evaluate a top employee with a huge amount of influence over the direction of the company to be certain no health- or age-related condition might be setting in.

However, as far as I know, age 70 is typically the retirement age for the city government where I used to work, but there were folks who should have retired earlier because they simply weren’t up to the job any longer. We other employees basically had to fill in for them until they reached 70 and had to retire because firing them would be taken as ageism.

I don’t know what the answer is. However, the risk of illness or loss of acuity gets greater and greater as a person ages so an employer does need to have some way of preventing the damage that could be done to people, property or the company by an employee who is no longer as sharp or as well as they once were.

I look at my mother and her Parkinson’s dementia as an example. She began having difficulties with a variety of tasks starting about ten years ago, long before her Parkinson’s was diagnosed. In fact, doctors kept telling us nothing was wrong when we could see she was not functioning the way she should. If she had been in my father’s job she could have seriously damaged a company that has 102000 employees in more than 100 countries and territories. Talk about too big to fail, if a primary executive can’t do what is needed a company can end up bankrupt.

Perhaps we need some way to require physical and mental evaluations once an employee reaches a certain age or a certain level in a companyisting on retirement at a specific chronological age.

mattbrowne's avatar

In Germany it’s not the companies, it’s the federal state.

Pachy's avatar

Older workers tend to make higher salaries and strain healthcare plans.

YARNLADY's avatar

Not all companies do have and it is probably different for each of the ones that do. Older workers tend to be seen as slowing down, not keeping up with innovation, using more health benefits, and making higher salaries than new workers.

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