In 2021, plane manufacturer Boeing was dealing with myriad challenges. The COVID-19 pandemic was continuing to disrupt air travel and plane production, and multiple crashes of the company’s best-selling plane, the 737 Max, had landed Boeing in a legal and PR crisis. On top of that loomed the retirement of then 64-year-old CEO, Dave Calhoun, who was just coming up on the company’s mandatory retirement age of 65.
To maintain some stability in a trying time, Boeing made a key policy decision. It changed its mandatory retirement age from 65 to 70 so Calhoun could continue to guide the company through the crises he’d already been navigating. (Calhoun retired earlier this month and was succeeded by Robert Kelly Ortberg.)
Who is subject to mandatory retirement?
Boeing is not the only major company to have such a policy requiring its CEO to retire at a set age. And stability and experience are chief among the reasons critics of mandatory retirement ages find the practice impractical and at odds with companies’ success.
It’s a sentiment Congress has supported since 1967, when the government body prohibited mandatory retirement for anyone over age 40 with the Age Discrimination in Employment Act. A 1996 amendment to the law, however, allowed public employers to institute mandatory retirement ages for jobs like firefighters and police officers. Today, airplane pilots, state court judges, and some C-suite executives and board members are also subject to mandatory retirement ages in the U.S.
“The law recognizes industries and positions where age may constitute a so-called bona fide occupational qualification,” says Stanford University professor Daniel Ho via email to Fast Company. Ho was the lead author of the 2021 paper, Mandatory Retirement and Age, Race, and Gender Diversity of University Faculties.
Mandatory retirement ages range from roughly 50 to 70 worldwide, according to the World Bank, with China setting the cap at 50 for women (and 60 for men) and France setting the age at 70 for both genders. Meanwhile, in the U.S. in 2022, the 10 oldest CEOs of the country’s 3,000 largest companies ranged from 84 to 91.
“Age caps have gradually increased over the years,” says Julie Daum, leader of executive consulting firm Spencer Stuart’s North American Board Practice. “Today 57% of S&P 500 boards set the maximum at 75 or older, up from 24% of S&P 500 boards 10 years ago.” Few boards have term limits for their directors, Daum adds, so mandatory retirement becomes “the primary tool for encouraging board refreshment.”
While some consider “refreshment” to be one of many important side effects of mandatory retirement ages, others call the practice ageist and describe it as a potential squandering of hard-earned experience.
“Does it have to do with age? Does it have to do with competence?” asks David Buck, owner of Kairos Management Solutions, a career and retirement consulting company. Having dug deeper into the reasons behind mandatory retirement ages, Buck found that they’re often instituted to try and create a “fair and level playing field” that doesn’t discriminate against individuals who start losing steam at work as they age. In other words, mandatory retirement ages let employers avoid awkward conversations about letting older workers go because they’re underperforming. Instead, everyone leaves at a certain age, regardless of their circumstances, no hard feelings.
In essence, mandatory retirement ages make a bet—that most 70-year-olds, for example, won’t be as effective at flying planes or policing the streets compared to most under-70-year-olds. Still, there’s a case to be made both for and against mandatory retirement ages, as their absence and presence can significantly affect both workers and the organizations that hire (and fire) them.
The risks of not retiring
Safety often comes to mind first when discussing mandatory retirement ages for certain professions, particularly life-saving ones like surgeons and firefighters. Though the American College of Surgeons doesn’t “support a mandatory retirement age because the onset and rate of age-related decline in clinical performance varies among individuals,” it does acknowledge that “gradual decline in overall health, physical dexterity, and cognition generally increases after the age of 60.”
While Congress has pushed to raise the mandatory retirement age of airline pilots from 65 to 67, the Federal Aviation Administration came out against the proposed change, saying it needed to research its safety. In roles where there are “heavy physical needs,” says Buck, mandatory retirement ages just make sense—“someone in their eighties is probably not going to have the physical demands required to be a firefighter.” The job necessitates quick reactions and physical strength that decline at older ages.
“The same goes for efficiency,” says Buck. “Do [workers] have the physical or cognitive abilities to be as efficient as they were [when they were younger]?” Declining efficiency can impact an entire company’s performance. As consultant Michael Goldblatt writing for the American Bar Association puts it, mandatory retirement ages can help companies “avoid the need to monitor competence.” Not to mention its effect on a company’s expenses, since long-time employees tend to take home more pay even as their performance may decline.
The positives of mandatory retirement
Change is also an important factor to consider when it comes to mandatory retirement. In his 2021 study that looked at American law school faculty from 1971 to 2017, Ho and colleagues found that when “the elimination of mandatory retirement took effect in 1994 . . . those on the cusp of retirement were disproportionately white (98%) and male (92%).” Thirty-nine percent of faculty, per Ho, “would have been subject to mandatory retirement” before the change. As a result, institutions were slower to hire younger faculty members, who were “far more likely to be women and minority scholars.”
“Proponents of mandatory retirement in education posit that it enables newer voices to be heard,” the study says. Per its findings, those newer voices were also more likely to bring diverse perspectives and lived experiences to their institutions.
The same goes for company boards. “One of the positive effects of having a mandatory retirement age is that it allows boards to plan for retirements and turnover,” says Daum. “Many boards are reluctant to have hard conversations with directors whose skill sets are no longer current or who are not contributing at the same level as they once did.”
Then there’s the question of dignity. Without a designated exit age, there’s an increased risk of workers aging out of their roles, physically or cognitively, before they feel ready and willing to leave them. “A retirement age allows people to leave the board gracefully and at a planned time,” Daum says.
The value of experience
While ability may decline with age, the flipside is that experience only increases with it. “There’s a balance, particularly with surgeons, about the level of expertise,” says Buck. “If someone’s athletically fit and has the energy to perform open heart surgery on me, that’s needed. But man, experience means a lot.” Plus, patients who are loyal to certain doctors might switch practices if the physician they’ve been coming to for years is no longer there. The same could be said for loyal clients or customers supporting other businesses.
On boards of directors, mandatory retirement can mean “the loss of a seasoned board member who has deep institutional knowledge and valuable experience,” says Daum. That deep knowledge might come in particularly handy during unexpected scenarios.
“Think of a difficult economic environment that is outside of the control of a single CEO,” says Matteo Tonello, a managing director at business research group The Conference Board. He gives the example of the COVID-19 pandemic, when multiple boards asked CEOs who were ready for retirement to stay on to help navigate the unprecedented crisis. “Why compound the business risks of the market difficulty with the disruptions and uncertainties of a CEO transition?” he says.
There’s also the danger of overestimating cognitive and physical decline in older workers. “You can line up 10 75-year-olds against the wall, and each one of them is going to be at a different place, cognitively and physically,” Buck says. “We are all aging differently.” Tonello applies this to CEOs. Say one reaches retirement age but continues to perform very well. “Why interrupt the momentum by imposing a leadership transition that almost inevitably comes with internal reorganizations and changes?” he asks.
Furthermore, mandatory retirement ages have the potential to negatively affect the health of those forced to stop working. Buck, 60, lives in a 55-plus community, where he sees both the “benefits” and “downsides” of retirement. Careers foster social connections, which have been shown to bolster both physical and mental health. “When you step into post-career or retirement life, immediately, on average, your social network drops by 50% and continues to decline,” says Buck, who’s seen that isolation negatively affect his neighbors.
Other options
Mandatory retirement ages may not be the only way to make room for younger, newer employees. Buck brings up options for phasing older workers out of their roles instead of forcing them into a hard stop.
“Many companies are willing to be flexible in what they’re allowing their employees to do,” he says, meaning older employees “can negotiate a part-time or project-based work mode.” This also lets them continue to share their expertise and mentor younger employees without having as demanding of a schedule.
Ultimately, though, juggling the pros and cons of mandatory retirement might just be unavoidable.“ The most important thing is to be aware of tradeoffs,” says Ho. “Our research shows that reducing discrimination along one dimension—age—can undercut advancement along other dimensions—gender and race. We often do not recognize these internal tensions in civil rights laws.”