Mandatory Retirement Policy

For most workers, retirement is a voluntary decision at the end of their careers. Deciding when to retire is personally and financially complicated. For some people, mandatory retirement policies place a firm end date on their careers, and that needs to be accounted for in retirement planning.

Definition

A mandatory retirement policy, put in place by an employer, requires workers to retire when they reach a certain age. Retirement policies typically use age as a determining factor -- not years of service or a combination of the two, as pensions and other retirement policies do. Once a worker who holds a position with a mandatory retirement policy reaches its designated age, he either must leave that employer or shift into a position that doesn't have mandatory retirement.

Justification

Mandatory retirement policy are intended to ensure that workers who no longer can perform their tasks safely or efficiently won't fail on the job. Careers with mandatory retirement policies include some positions in public safety, emergency management and air traffic control. All of these jobs require quick, accurate judgment; even small errors can cost lives. Because safety is behind these mandatory retirement policies, they are akin to minimum age policies that keep young workers from operating dangerous machinery.

Legal Issues

Because mandatory retirement policies force workers out of their jobs based solely on age, they have fallen under a great deal of legal scrutiny. In a typical at-will employment relationship, it is illegal for an employer to release a worker based solely on age. According to the American Bar Association, lawsuits against employers who use mandatory retirement policies claim age discrimination, and can lead to financial liability for the employers.

Retirement Planning

Planning for retirement becomes more complicated if you work in a position that has a mandatory retirement policy. After a certain age, you might not have the choice to stay in your job to earn additional money for retirement. You also might lose access to your employer's retirement savings programs. You might want to plan for a new full-time or part-time job before mandatory retirement. And individual retirement accounts can help you continue to save after mandatory retirement.

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