Jerome E. Coffey
English
MSU-Bozeman
The aging professorate and the corresponding elimination of mandatory retirement in 1994 have deeply concerned university administrators and planners. The old days when faculty members typically retired between ages 65 and 70 are simply gone. Some now choose early retirement before age 62, the majority still make the election during the "traditional" period of 62 to 70, but more than a few opt to work into well their 70's and beyond. As a result, it is increasingly difficult to infuse the ranks with younger faculty and, at the same time, meet the demands for more ethnic diversity and gender equality amongst the faculty. Moreover, the financial pressures on university administrators make the potential cost savings from replacing older Full Professors with younger less expensive Assistants quite appealing. Yet with no mandatory retirement age, administrators have little leverage.
The dilemmas facing faculty members are equally complex. Should you retire early or continue to work until traditional retirement age or beyond? Should you start withdrawing from Social Security as soon as you are eligible or wait for full benefits? Should you accept an early retirement incentive or wait? Should you negotiate for a phased retirement plan or post-retirement agreement, and under what terms? Will you be able to continue your research after retirement, and what kind of institutional support can you expect for that work? Will you have sufficient income in retirement or will you need to continue working? Will you thrive in retirement and be able to pursue those long-deferred dreams or will you miss the stimulation of classroom and colleagues?
The title To Retire or Not is somewhat deceptive. The issues are not addressed from the perspective of the faculty member, but largely from university administrators' points of view. Still, all expectant retirees, collective-bargaining committee members, and officials would be wise to ponder these pages very carefully. A tidal wave of retirements looms and major changes in retirement policies are inevitable. In the fast-approaching new environment, only wise and well-informed individuals and bargaining units will be able to negotiate effectively.
To Retire or Not is a collection of papers edited and compiled from a TIAA-CREF sponsored national conference on faculty retirement held in Washington, D.C., in May 1998. The purpose of the collection is to "examine the impact of ending mandatory retirement, the aging of faculties in higher education, and human resource policies universities employ to influence the retirement decisions made by older faculty" (1). The topics of the ten papers range from assessments of changing retirement patterns at large public institutions and smaller private universities to evaluations of early retirement incentives to case studies on retirement practices at various institutions. The authors are leading experts on faculty retirement issues so the quality of the papers is uniformly high.
The elimination of a mandatory retirement age has significantly altered the patterns by which professors end their careers. Recently compiled TIAA-CREF data show that before 1994, dates of retirement tended to cluster around the mandatory ages of 65 and 70. Since 1994, a bifurcated pattern seems to have emerged with many taking early retirement and many more continuing to work beyond age 70. Twenty years ago, 42 percent would start taking an annuity at age 65, 31 percent before 65, and 27 percent after 65. Today only 19 percent begin their withdrawals at 65, 39 percent begin before 65, and 42 percent after 65. Those choosing to continue working into their 70's has risen from 5 percent in 1980 to 8 percent today (Denise K Magner, "The Imminent Surge in Retirements," Chronicle of Higher Education, 17 August 2000, A19).
The net result is the graying of the professorate. By way of illustration, the average age at public universities in North Carolina increased between 1988 and 1997 by more than two years from 46.5 years to 49 years. During that same period, the proportion of faculty under age 40 decreased from 27 to 18 percent while the number of faculty age 55 and older increased from 24 to 29 percent. There are two reasons for these trends: the increased average age of new hires and the decreased rates of retirement for existing faculty (Clark and Hammond 8). North Carolina's experiences are probably typical.
While nationwide data is yet to be compiled, To Retire or Not reports other suggestive and interesting trends: Faculty members participating in defined benefits plans such as the Montana Teachers' Retirement System (TRS) are 10 percent more likely to retire at any age than those participating in defined contribution plans such as TIAA-CREF (our own Optional Retirement Plan or ORP). This should come as no surprise. After one is eligible for full retirement, one gets only marginally higher stipends for each additional year of service (8). In the case of TRS, only 1.67 percent is added for every additional year of service. In contrast, contributions and accruals at the end of one's career under a defined contribution plan such as TIAA-CREF can be significant and provide great motivation to continue working.
Faculty members at research institutions are far less likely to retire early than those at teaching institutions. Higher salaried faculties are far less likely to retire than their lower salaried colleagues. Gender and race did not seem to affect retirement patterns at all (7).
An interesting counter trend is that "high accumulators" or those with more than $450,000 in total funds are far more likely to retire at any age (7). The number of these high accumulators is relatively small and therefore does not distort the overall trend towards later retirement for TIAA-CREF participants.
All the studies reviewed by Clark and Hammond show no correlation between age and research productivity, or age and classroom vitality and effectiveness. In fact, the variations in research productivity and classroom effectiveness within age groupings were larger than variations between age groups (3).
Early retirement incentive programs sometimes induce faculty to retire earlier than planned. These incentives come in a variety of forms: one-time cash buyouts, pension credits, phased retirement or post-retirement plans, and continuing access to campus facilities such as labs, offices, e-mail, parking, and secretarial support.
The impending retirement crisis is like a pig passing through a python. A huge number of faculty were hired in the 1960s and early 1970s and these individuals are now approaching the traditional retirement age of 60. At the same time, there is a large pool of well-trained Ph.D.s biding their time in post-doctorates or teaching as adjuncts while awaiting tenure track positions. The dilemma for university administrators is equally profound. The ending of mandatory retirement has given the tenured professor a new job entitlement and with the exception of those dismissed for cause, the retirement decision is now entirely in the hands of the professor. At the same time, constricting university budgets provide few resources for institutions to offer early retirement incentives. How then will this "bulge" pass through the belly of the python without indigestion, and how will the profession renew itself without new sources of nutrition?
A number of solutions have been suggested and tried; few of them have shown much promise and fewer still have achieved great success. About 80 percent of all public and private institutions offer some sort of retirement incentive plan (John Keefe, "Early Retirement Practices in Higher Education" in Clark and Hammond 65). These programs come in two general forms: incentive payment plans where faculty members receive some sort of severance payment or additional service credit and phased retirement plans where faculty members agree to retire at reduced work loads for a proportionate reduction in salary. Early incentive opportunities can be subdivided into window plans which must be accepted by a fixed date, and ongoing plans that are always available to faculty after a set age or number of years of service. One must also distinguish between formal plans whose terms are published and available to all, and informal plans arrived at through individual negotiation with the administration.
Amazingly enough, there is little data to show if these early incentive plans are successful. Most administrators are reported to be fairly negative about them because these plans are far more expensive than anticipated and because productive faculty are lost in the process. The reports on phased retirement plans were equally critical. As in the "buyout" plans, most administrators cited escalating costs and the loss of desirable staff as serious negatives (Keefe 76). The University of California system's experience is probably typical. Because of unprecedented returns in its retirement funds, UC was able to offer a very generous "once only" buyout in 1991. Less than 31 percent of eligible faculty took the offer. An even more generous "once only" offer a year later resulted in an even lower acceptance rate of 18 percent. A "best and final" incentive plan in 1994 found 33 percent acceptance. Although this UC incentive was far more expensive than anticipated, it was ultimately declared a "success" because it had, after three attempts, finally met its targeted rate of acceptance (Keefe 79).
Montana's experiences seem to parallel the national averages, but one cannot be certain. There has never been, to my knowledge, any formal study of the success of our Post-retirement Program and only incomplete data gathered about the one-time-only retirement incentive offered by the Montana Legislature. In 1993 the Montana Legislature offered a windowed cash buyout plan to all University employees. The incentive went into effect on July 1, 1993 and employees were required to elect retirement by June 30, 1994 in order to receive the bonus. Employees with 5 or more years of service, were offered 14.5% of their final average salary as a cash incentive to retire. With 10 years of service they could receive 29% of final average salary and with 15 years, 44.5% of their final average salary up to a maximum of $15,000. These buyouts had to be paid for out of departmental budgets.
This program had many unintended consequences. Much money was spent giving bonuses to those intending to retire anyway. Because of the salary compression of older faculty and the higher-than-anticipated costs of paying "market" for new faculty hires, there was often little reduction in payroll costs. When recruiting and start-up costs were factored in, the anticipated salary savings evaporated. During that period, many highly productive and valuable faculty members took the cash incentive and left the State to finish their careers elsewhere. For all of these reasons, most MUS officials concluded that this buyout program was ill conceived, poorly designed, and resulted in an overall net loss to the University System.
All of the buyout programs share one fatal design flaw: they assume that money is the only or the most important incentive that motivates faculty to retire early. Yet money is only one of many complex factors that influence the retirement decision. Equally important are desire for more time flexibility, worry about the loss of status and access to facilities that might come with retirement, the wish to continue to teach perhaps with a lightened load, desire to continue one's research program, and hope for a reduction in the less rewarding aspects of their service responsibilities. A well design phased retirement program might be able to address most of these concerns.
In a recent article in the Chronicle of Higher Education, Professor Cary Nelson explains "Why Colleges Need a New Class of Senior Scholars" (8 March 2000, B1). He suggests that by offering a combination of post-retirement employment and an enhanced emeritus status called "senior scholar," both retiree and the institution would benefit. The students would gain from the expertise of a senior scholar continuing to teach. The scholar could use the time freed up by part- time employment to complete research too long deferred by other duties. The university and the department would gain the knowledge and wisdom of a senior scholar sharing his or her experiences in mentoring younger colleagues, serving on task forces or committees, or simply detailing the "corporate history" with junior staff. "Senior Scholar" status could serve as the final promotion to productive retirement.
A cash buyout might work for those individuals who wish simply to retire completely, take their money, and run to other places or professions. Yet it is very difficult, in light of current labor law, to make offers to only a select group of faculty so motivated. A well constructed phased retirement program seems like an ideal solution for the majority that are at the end of their careers and desirous of more free time and more flexibility in scheduling their professional activities, but who are reluctant to end their careers completely. An enhanced phased retirement plan might provide an ideal solution for the university and the retiree both.
The MUS Post-retirement Program combined with Professor Emeritus status could provide the core of an ideal phased retirement plan, but right now both are too restrictive in their current forms and would need to be enhanced. The Post-retirement program currently allows for up to a maximum of 3 years of part-time service at one third of final average salary. The 3-year restriction is artificial and often delays retirement until age 59 or 62 when the program can be used as a bridge to Social Security benefits.
A 10-year maximum seems more reasonable and a far better incentive. The current emeritus status offers some prestige value but little else. It should be formalized to include rights of access to campus facilities, campus computer networks, and e-mail accounts, secretarial support, stationary, mailboxes and campus mail, parking and, whenever possible, continued use of an office and lab. In addition, emeriti professors should be allowed to participate in faculty and department meetings and other committees ex officio. An enhanced phased retirement program along these lines would open the university to the energy and idealism of recently trained new hires, while, at the same time, preserving the contributions, wisdom, and continuing productivity of our senior staff.