Joint retirement of couples: Evidence from discontinuities in Denmark

Abstract

We study joint retirement and its underlying determinants. First, we use full-population data from Denmark and a discontinuity design to document joint retirement at the early pension eligibility age. For every 100 individuals who retire when they reach pension eligibility, around 8 of their spouses adjust their behavior to retire at the same time. Next, we investigate mechanisms. We begin by arguing that our estimates are explained primarily by leisure complementarities. We then explore heterogeneity and pathways couples take to retire together. We find that age differences are a fundamental determinant of joint retirement, which is driven by older spouses waiting to retire and claim pension benefits until their younger partners reach pension eligibility as well. We also show that females respond more than males and that secondary earners respond more than primary earners. Finally, we show that a reform increasing eligibility ages induced similar joint retirement spillovers.