Wharton Pension Research Council Working Papers

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Working Paper

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This paper investigates the influences on retirement behavior among older workers who were surveyed by the Health and Retirement Study (1992-2004). It is found that increases in all categories of wealth (pension, housing equity and other financial wealth) raise the probability of retiring, while good earnings prospects induce continued employment. Retirement plan types have significant impacts: workers covered by defined benefit (DB) plans are more likely to retire, while the defined contribution (DC) plan coverage significantly delays retirement. Furthermore, the probability and thus timing of retirement for DC plan participants are susceptible to the influence of business cycles through income flow fluctuations that are due to investment performance and interest rate changes. Health insurance (HI), if conditional on employment, strongly defers retirement, while alternative sources of insurance such as employer-sponsored retiree HI, spouse’s HI, public HI or COBRA coverage, encourages labor force exit. The scheduled increases in the full retirement age for Social Security act to encourage younger cohorts to work longer.

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© 2008 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.


Opinions expressed here are the authors’ own and not necessarily those of their affiliation. We thank Wendi Bukowitz, Carl Hess, Richard Jackson, Allen Jacobson, Erika Kummernuss, Michael Orszag, James Poterba, Mark Ruloff, Ken Steiner, and seminar participants at the Center for Strategic and International Studies for useful comments. All findings, interpretations, and conclusions of this paper represent the views of the author(s) and not those of the Wharton School or the Pension Research Council. ©

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Date Posted: 07 August 2019