Retirement Behavior Research Articles

Determinants of Life Satisfaction in Older Russians

In Russia, the process of population aging has recently become the topic of many studies examining the socioeconomic characteristics, health status, and retirement behaviors of older people. Nonetheless, research on the life satisfaction of Russian seniors and its determinants is still rather scarce. Thus, identifying the factors of life satisfaction in old age could enable the development of a sound state policy towards the elderly and enhance the well-being of society as a whole. This paper explores the determinants of older adults’ life satisfaction using cross-sectional and panel data from the Russia Longitudinal Monitoring Survey (RLMS-HSE). Our research shows that for all Russian seniors (females over the age of 55 and males over the age of 60), the strongest and most common correlates of life satisfaction are: marital status, health status, social status, and personal income. We found significant gender differences in the factors of life satisfaction: an inverse U-shaped relation of age and life satisfaction is characteristic for the oldest females only; having a job and having a higher education enhances life satisfaction for women but not for men. The type of settlement and parental status have no correlation with seniors’ life satisfaction.

WHAT EXPLAINS THE DIFFERENCE IN THE EFFECT OF RETIREMENT ON HEALTH? EVIDENCE FROM GLOBAL AGING DATA

AbstractThis paper analyzes the reasons for differences in the estimated effect of retirement on health in previous studies. We investigate these differences by focusing on the analysis methods used by these studies. Using various health indexes, numerous researchers have examined the effects of retirement on health. However, there are no unified views on the impact of retirement on various health indexes. Consequently, we show that the choice of analysis method is one of the key factors in explaining why the estimated results of the effect of retirement on health differ. Moreover, we re‐estimate the effect of retirement on health by using a fixed analysis method controlling for individual heterogeneity and endogeneity of the retirement behavior. We analyze the effect of retirement on health parameters, such as cognitive function, self‐report of health, activities of daily living (ADL), depression, and body mass index in eight countries. We find that the effects of retirement on self‐report of health, depression, and ADL are positive in many of these countries.

Job Satisfaction, Retirement Attitude and Intended Retirement Age: A Conditional Process Analysis across Workers' Level of Household Income.

In the contemporary workplace, insight into retirement behaviors is of crucial importance. Previous empirical evidence has found mixed results regarding the relationship between work attitudes, such as job satisfaction, and retirement behaviors, suggesting that further scholarly examination incorporating moderating and mediating variables into retirement models is needed. Drawing on comparative models of attitude to retirement, we hypothesized a direct relationship between job satisfaction and intended retirement age for workers with a high household income and an indirect relationship between job satisfaction and intended retirement age, via retirement attitude, for workers with a low or mean household income. We collected data from a sample of 590 United Kingdom workers aged 50+. Using conditional process analysis, we found that the underlying mechanisms in our research model differ according to socio-economic status. We found no direct effect between job satisfaction and intended retirement age. However, an indirect effect was observed between job satisfaction and intended retirement age, via retirement attitude, for both low- and mean-household income individuals. Specifically, the relationship between job satisfaction and retirement attitude differed according to socio-economic group: for high-household income older workers, there was no relationship between job satisfaction and retirement attitude. However, for low- and mean-household income older workers, we observed a negative relationship between job satisfaction and retirement attitude. Otherwise stated, increases in job satisfaction for mean and low household income workers are likely to make the prospect of retirement less attractive. Therefore, we argue that utmost care must be taken around the conditions under which lower income employees will continue their work when getting older in order to protect their sustainable employability.

Optimal consumption, investment and housing with means-tested public pension in retirement

In this paper, we develop an expected utility model for retirement behaviour in the decumulation phase of Australian retirees with sequential family status subject to consumption, housing, investment, bequest, and government-provided means-tested Age Pension. We account for mortality risk and risky investment assets, and we introduce a “health” proxy to capture the decreasing level of consumption for older retirees. Then, we find the optimal housing at retirement, the optimal consumption and optimal risky asset allocation depending on age and wealth. The model is solved numerically as a stochastic control problem, and it is calibrated using the maximum likelihood method with empirical data of consumption and housing from the Australian Bureau of Statistics 2009–2010 Survey. The model fits the characteristics of the data well to explain the behaviour of Australian retirees. The key findings are as follows. First, the optimal policy is highly sensitive to means-tested Age Pension early in retirement, but this sensitivity fades with age. Second, the allocation to risky assets shows a complex relationship with the means-tested Age Pension. As a general rule, when wealth decreases, the proportion allocated to risky assets increases, because the Age Pension works as a buffer against investment losses. Third, couples can be more aggressive with risky allocations owing to their longer life expectancy compared with singles.

Adding Scars to Wrinkles? Long-run Effects of Late-Career Job Loss on Retirement Behavior and Personal Income

Adding Scars to Wrinkles? Long-run Effects of Late-Career Job Loss on Retirement Behavior and Personal Income

Retirement blues

This paper analyses the short- and longer-term effects of retirement on mental health in ten European countries. It exploits thresholds created by state pension ages in an individual-fixed effects instrumental-variable set-up, borrowing intuitions from the regression-discontinuity design literature, to deal with endogeneity in retirement behaviour. The results display no short-term effects of retirement on mental health, but a large negative longer-term impact. This impact survives a battery of robustness tests, and applies to women and men as well as people of different educational and occupational backgrounds similarly. Overall, the findings suggest that reforms inducing people to postpone retirement are not only important for making pension systems solvent, but with time could also pay a mental health dividend among the elderly and reduce public health care costs.

Labour force activity after 65: what explain recent trends in Denmark, Germany and Sweden?

In most OECD member countries labour force attachment, has increased in recent years not only in the age groups 60–64 years but also among people 65 years and older. Focus in this paper is on the trend in older workers’ labour force participation in Denmark, Germany and Sweden since 2004. Main emphasis is given to people aged 65–69 years eligible for social security retirement programs from age 65. The gender aspect is included to accommodate different trends for women and men. To explain country differences in trends, the importance of changes in retirement policies of relevance for this age group and cohort relevant changes in education and health is examined and discussed. Further, country differences in the impact from education and health is examined. Results show that the largest increase in labour force participation among people aged 65–69 years has taken place in Sweden following by Germany, while the increase in Denmark is rather small. While the increase in Germany mainly seems to be a result of policy reforms, the increase in Sweden appear to be a result of a combination of policy changes and an increasing educational level. Financial incentives seem most important in Germany and only of minor importance in Denmark, where policy changes directed towards individuals above the age of 65 appear to have been too small so far to affect retirement behaviour significantly.

Are retirement intentions and behaviours in ageing employees instinctive? An empirical study conducted in sugar factories from Sindh, Pakistan

This study is designed to evaluate the source which develops perceptions, intentions and retirement behaviours in aging employees. Job strain, job insecurity, perceived satisfaction of retired life is taken into account for the analysis of aging employees' self-directedness towards the retirement intentions and behaviours. Two hundred fifty-one male participants qualified from the sugar factories to take part in this study aging from 35 to 65 years. Correlation statistics and structural equation modelling were employed to obtain logical and comprehensive results. Findings suggest that adolescence age is not the only significant predictor for the retirement. Job strain, insecurity and perceived satisfaction on retired life accounted for retirement intentions and retirement behaviours. However, analyses revealed that the effect of retirement intentions on retirement behaviours was mediated by self-directedness. Organisations are most likely to be affected by the timely or untimely retirement of such employees and therefore they have their interest and concerns over the issue.

Do Good Working Conditions Make You Work Longer? Evidence on Retirement Decisions Using Linked Survey and Register Data

We analyze the potential role of adverse working conditions and management practices in the determination of employees' retirement behavior. Our data contain both comprehensive information regarding perceived job disamenities, job satisfaction, and intentions to retire from nationally representative cross-sectional surveys and information on employees' actual retirement decisions from longitudinal register data that can be linked to the surveys. Using a trivariate ordered probit model, we observe that job dissatisfaction arising from adverse working conditions is significantly related to intentions to retire, and this in turn is related to actual retirement during the follow-up period.

Expected Labor Force Activity and Retirement Behavior by Age, Gender, and Labor Force History

ABSTRACTWe find and estimate probability mass functions for labor force related random variables. Complete life expectancy (by age, gender, and two years of labor force history) is decomposed into expected years of future labor force activity and inactivity as well as into expected years until final separation from the labor force and expected years in retirement. We also calculate expected age at retirement and expected years in retirement for people who actually retire. Two consecutive years of inactivity, especially in middle age, is a key indicator for both men and women when accounting for future labor force participation and retirement. For example, women (men) who are out of the labor force at age 49 and again out of the labor force at age 50, can expect to be in the labor force seven (eight) fewer years in the future than their counterparts who were in the labor force at ages 49 and 50. In addition, they have expected retirement ages 4.5–5.5 years younger than their active counterparts.

Are retirement intentions and behaviours in ageing employees instinctive? An empirical study conducted in sugar factories from Sindh, Pakistan

Are retirement intentions and behaviours in ageing employees instinctive? An empirical study conducted in sugar factories from Sindh, Pakistan

Impact of Inheritance and Housing Wealth on Retirement Decision

This paper proposes to find how wealth shocks such as inheritances and housing wealth impact retirement behaviour using cross-sectional micro data from the Canadian Survey of Financial Security. Estimation of wealth impact on retirement decision is challenging since wealth and retirement decision may be endogenously determined. We found no evidence that housing wealth impacts retirement decision suggesting that individuals are correctly anticipating future housing wealth and adjusting their labour market behaviour accordingly. However, the data supports the hypothesis that receiving an inheritance significantly increases the retirement hazard, which may indicate the existence of some financial constraints.

Late Career Job Loss and Retirement Behavior of Couples.

This article argues that wealth uncertainty influences when couples choose to retire. Using data from the Health and Retirement Study, I show that wives delay retirement when their husbands retire following a job loss. This effect is stronger when husbands are the primary earners, and couples are relatively poorer. This provides evidence of intra-household insurance that mitigates the impact of an unexpected earnings shock. I find that wives tend to delay retirement only until they become eligible for social security. This suggests that social security benefits can relax households' budget constraints and allow wives to join their husbands in retirement.

What happens to the husband\u2019s retirement decision when the wife\u2019s retirement incentives change?

In this paper, I exploit population-wide administrative data and a Swedish occupational pension reform, which primarily affected a subgroup of female workers, to recover the effect of the wife’s retirement incentive on the husband’s retirement behavior. I estimate a sharp relative decrease in the retirement probability of 63-year-old wives who were treated by the reform. However, there was no significant response of their husbands, and this finding is surprisingly robust. This suggests that cross-effects (from the wife to the husband) are substantially smaller than the direct effects of the wife’s own incentive on the wife’s retirement.

Strategic Retirements of Elected and Appointed Justices: A Hazard Model Approach

Strategic accounts of judges usually consider various aspects of dispensation of cases. We look beyond these traditional areas of study in judicial politics to examine whether state supreme court justices render strategic retirement decisions. More specifically, we posit a dual theory of strategic retirements conditioned upon the institutional arrangements in which elected and appointed justices make retirement decisions. Employing an event history framework that analyzes the duration of state supreme court justices’ tenure and reason for departing the bench in the several selection and retention systems from 1980 to 2005, we show that elected and appointed justices engage in strategic retirement behavior but do so as a function of the diverse environments in which they operate. Our study implicates a number of theoretical, empirical, and normative issues regarding the selection and retention of state supreme court justices.

How Teachers Respond to Pension System Incentives: New Estimates and Policy Applications

Rising costs of public employee pension plans have caused fiscal stress in many cities and states and have led to calls for reform. To assess the economic consequences of plan changes, it is important to have reliable statistical models of employee retirement behavior. The authors estimate a structural model of teacher retirement using Missouri administrative panel data. A Stock-Wise option value model provides a good fit to the data and predicts well out-of-sample on the effects of pension enhancements during the 1990s. The structural model is used to simulate the effect of alternatives to the current defined benefit plan.

Labor Force Transitions at Older Ages: Burnout, Recovery, and Reverse Retirement

Partial and reverse retirement are two key behaviors characterizing labor force dynamics for individuals at older ages, with half working part-time and over a third leaving and later re-entering the labor force. The high rate of exit and re-entry is especially surprising given the declining wage profile at older ages and opportunities for re-entry in the future being uncertain. In this paper we study the effects of wage and health transition processes as well as the role of accrues work-related strain on the labor force participation on older males. We find that a model incorporating a work burnout-recovery process can account for such reverse retirement behavior that cannot be generated by health and wealth shocks alone, suggesting re-entry patterns result in large part from planned behavior. We first present descriptive statistics of the frequency and timing of re-entry and characteristics of those who re-enter using Health and Retirement Study (HRS) panel data. We then develop and estimate a dynamic model of retirement that captures the occurrence and timing of re-entry decisions observed in the data-as well as the transition to part-time work-while incorporating uncertainty in earnings, health, and stress accumulation. The burnout-recovery process allows us to account for about 40 percent of re-entry, and one-quarter of the shifts to part-time work with age. We also consider the lower exit and re-entry rates after 2008, and attribute this to high option values of work in an environment where future re-entry is less certain. Consistent with our burnout-recovery model, we see that respondents are more likely to report high levels of job stress as they continue to work when they would have otherwise stopped working, recovered, and re-entered. This offers us some information about the relative option value of work versus the burnout-recovery process.

Does Pension Plan Structure Affect Turnover Patterns?

Public pension plans face pressures to cut costs. Although government costs and retiree benefits drive changes in retirement plans, policy makers should also consider impacts on turnover and retirement behavior. In the mid-1980s, Congress moved new federal employees from a traditional defined benefit (DB) pension plan to a new hybrid plan, comprised of a smaller DB plan, Social Security, and a new defined contribution (DC) plan. Early analyses of the change from the Civil Service Retirement System (CSRS) to the Federal Employees Retirement System (FERS) found a decrease in turnover rates, but our analysis of a 1% sample of federal personnel records from 1979 to 2009 indicates that exit rates for federal employees in their late 30s to early 50s are one-third higher under FERS than they were for comparable employees under CSRS. Conversions to fully DC plans by state and local governments could have even larger impacts on the stability of their workforces. Государственные пенсионные планы столкнулись с необходимостью сокращения расходов. В то время как правительственные расходы и пенсионные выплаты ведут к изменениям в структуре пенсионных фондов, политики должны одновременно учитывать их воздействие на текучесть среди рабочих кадров и их пенсионного поведения. В середине 1980-х годов, Конгресс перевел всех новых федеральных служащих из традиционного пенсионного плана с установленными размерами пенсий (УРП) на новый гибридный план, частично состоящий из меньшего плана с УРП, выплат из социального фонда, а также нового плана с установленными взносами (УВ). В то время как ранний анализ перехода от пенсионной системы для государственных служащих (ПСГС) к пенсионной системе для федеральных служащих (ПСФС) обнаружил снижение темпов текучести среди рабочих кадров, наш анализ 1-го процента федеральных кадровых записей с 1979 по 2009 год указывает на то, что уровень ухода с работы среди федеральных служащих 30-ти лет на треть выше чем среди их 50-ти летних коллег при ПСФС, чем это было среди сопоставимых групп работников при ПСГС. Таким образом, полный переход на планы с УВ на уровне штатов и местного самоуправления может привести к еще большему нарушению стабильности трудовых ресурсов.

Does poor health raise preferences for retirement?

The objective of this study is to examine the associations of health status with retirement attitudes in terms of retirement leisure preference and worry for retirement. Data are from the 2003 Survey of Health and Living Status of the Middle Aged and Elderly in Taiwan. Our results show that older workers with poor health actually do not prefer retirement leisure that much and are more worried about retirement life. The findings suggest that older workers with poor health derive lower relative utility from leisure and higher relative utility from work/consumption. Given that poor health is associated with a relatively lower preference for leisure than for work/consumption, the early retirement behavior of older workers with poor health might be due to factors other than preferences, namely the two other channels: poor health depressing wages and poor health as an indicator of shorter life expectancy.

The impact of inheritances on the retirement behavior of older Europeans

The aim of this paper is to study how wealth affects retirement behavior. I use data from the 2004–2012 Survey of Health, Ageing and Retirement in Europe, covering 10 European countries. Inheritances are used as an exogenous change in wealth to estimate the causal effect of wealth/inheritance receipt on retirement. I apply binary choice models for a sample of persons working in 2004/05 to estimate the effect of inheritance receipt during 2005–2011 on the probability of retirement in 2011/12. By comparing data on expected retirement age at the beginning of the sample period with actual retirement age I am able to control for unobserved factors that might be correlated with wealth and affect retirement decisions. The main findings are: (1) Inheritance receipt is quite common for individuals nearing retirement age (50+). About 20 % of the sample aged 50 and older in 2011/12 live in households that received at least one inheritance between 2005 and 2011. (2) Inheritance receipt significantly increases the probability of retirement and the effect increases with the size of the inheritance. (3) In contrast to what life-cycle theory suggests I do not find any evidence that expected and unexpected inheritances affect adjustments of planned retirement age differently. These results are important for assessing the effect of policies that induce changes in wealth, such as pension reforms, tax reforms or reforms of Social Security, on retirement behavior.