Economic Determinants of the Optimal Retirement Age: An Empirical Investigation / Gary S. Fields, Olivia S. Mitchell.

Format:

Book

Author/Creator:

Fields, Gary S.

Contributor:

National Bureau of Economic Research.

Mitchell, Olivia S.

Series:

Working Paper Series (National Bureau of Economic Research) no. w0876.

NBER working paper series no. w0876

Language:

English

Subjects (All):

Retirement age.

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Economic Determinants of the Optimal Retirement Age

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1982.

Cambridge, Mass. : National Bureau of Economic Research, 1982.

Summary:

This paper examines how the structure of earnings and pension opportunities affects retirement behavior. We use a life cycle model of labor supply, paying special attention to the institutional features of private pensions and Social Security benefits. This theoretical formulation is used to develop comparative dynamic pre- dictions and to guide empirical modeling. Data from a new survey of workers and their income alternatives are used to implement the empirical model. Along the way, we highlight a number of interesting and little known facts about older workers' income. Contrary to popular opinion we find that private pensions are not always actuarially neutral; Social Security benefits do not typically decline (in present value terms) the longer retirement is deferred; and for many people, retirement income approaches and even exceeds net labor income. On the basis of empirical estimates of retirement parameters, we conclude that (1) people with higher base incomes retire earlier, and (2) those who have more to gain by postponing retirement, retire later. These findings are relevant to proposed reforms of the Social Security system as well as pension programs.

Notes:

Print version record

April 1982.

Includes bibliographical references.