Pros and Cons of Mandatory Retirement

Pros and Cons of Mandatory Retirement
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The American workplace changed with the passage of the Age Discrimination in Employment Act, or ADEA, that eliminated mandatory retirement for those employed by organizations with at least 20 workers. Exceptions to the act include federally employed air traffic controllers, Homeland Security officers and FBI agents, who must retire at the age set by these government agencies. ADEA also allows companies to set retirement ages for their executives and states to impose compulsory retirement for certain positions. Some of those affected by ADEA exceptions have turned to lawsuits to keep their jobs, reigniting the controversy of age discrimination.


"Mandatory retirement can actually be positive for organization productivity and success," says Rosanna Sattler, partner at the Boston-based law firm Posternak Blankstein and Lund. "In the legal and accounting world, partnership agreements often include mandatory retirement at a predetermined age, because partners are not technically considered employees. It helps the bottom line by eliminating salaries for those who become figureheads rather than effective, productive members of the organization by the time they reach retirement age,” explains Sattler.

Acknowledging that airline pilots, federal law enforcement officers and firefighters share the career-ending plight of forced retirement, Sattler stresses: "These public service positions rely on physical and mental strength more than other fields. Mandatory retirement ensures that older employees aren't given the taxing responsibilities associated with public safety."

Sattler says that the positive outcome is "a predictable, regular flow of retirements, which, in turn, open up new job opportunities for less senior workers." Mandatory retirement creates jobs, she says, adding that "it opens up new entry-level positions that bring fresh workers into the field."


Donald Mazzella, editorial director of human resources media at Information Strategies, points out that 59 percent of human resources leaders he polled frown upon mandatory retirement. "Older people provide stability and a commitment to work we often don't see in younger workers," he says. "Their longevity may mean higher salaries, but it also means they do not leave as readily as younger employees, which avoids the cost of finding replacements."

"In one of our focus groups, an HR leader pointed out that retirement requirements were put in place when the average life span was lower," Mazzella says. "Today, older workers are willing to learn new things, and they take criticism better," he adds, citing older worker adaption to new technology as an example.

"Older workers bring institutional knowledge and experience that enables them to mentor better," Mazzella declares. Referring to 2012 research conducted by the Sloan Center on Aging and Work at Boston College, Mazzella notes that employers increasingly look for ways to hang on to that knowledge by placing older workers in consultant and part-time staffer roles.


Mandatory retirement shortens the time employees have to accumulate retirement savings. However, most employers have replaced pension plans with employee-funded defined contribution plans such as 401(k)s and IRAs, making continued employment of older workers more budget friendly. While compulsory age limits for some positions open doors for job growth, older workers have experience and insight that organizations, especially higher education institutions, can tap. Diversity programs once associated with gender and ethnic inclusion now include age as key to a well-balanced workforce. The challenge for businesses, however, remains maintaining the right balance of new, inexperienced workers and workers nearing or past retirement age.