Retirement Timing Research Articles

Using HRS-ONET Linked Data to Study Subjective and Objective Mismatch Between Work Demands and Capacity at Older Ages

Mismatch between demands of work and workers’ ability to meet those demands may play an important role in retirement decisions. This presentation extends earlier work using Health and Retirement Study data linked to O*NET to develop measures of discrepancy between individual’s own reports of physical and mental abilities and 1) their perceptions of the physical and mental demands of their jobs and 2) O*NET ratings of the physical and mental demands of their jobs. In particular, we utilize newly available linked information using 2010 Census codes and 2019 O*NET ratings that reflect more current jobs. We then examine the impact of each type of mismatch (subjective and objective) on retirement timing. Overall, we find a stronger connection between subjective mismatch relative to objective mismatch. We discuss implications of this finding in terms of the value of the O*NET linkage and potential interventions aimed at extending working lives for positive aging.

Optimal Retirement Under Partial Information

The optimal retirement decision is an optimal stopping problem when retirement is irreversible. We investigate the optimal consumption, investment, and retirement decisions when the mean return of a risky asset is unobservable and is estimated by filtering from historical prices. To ensure nonnegativity of the consumption rate and the borrowing constraints on the wealth process of the representative agent, we conduct our analysis using a duality approach. We link the dual problem to American option pricing with stochastic volatility and prove that the duality gap is closed. We then apply our theory to a hidden Markov model for regime-switching mean return with Bayesian learning. We fully characterize the existence and uniqueness of variational inequality in the dual optimal stopping problem, as well as the free boundary of the problem. An asymptotic closed-form solution is derived for optimal retirement timing by small-scale perturbation. We discuss the potential applications of the results to other partial-information settings.

Retirement Adjustment in Germany From 1996 to 2014

Abstract The context of retirement has changed over the last decades, but there is little knowledge on whether the quality of retirement adjustment has changed as well. Changes in retirement regulations and historical differences in resources may affect the quality of adjustment and increase inequalities between different socioeconomic groups. In the present study, we investigated historical differences in retirement adjustment by comparing cross-sectional samples of retirees from 1996, 2002, 2008, and 2014, based on the population-based German Ageing Survey. Adjustment was measured with three different indicators (perceived change in life after retirement, retirement satisfaction, adjustment difficulties). Retirement satisfaction was higher in later samples, but for the other two outcomes, there was no evidence for systematic increases or decreases in levels of retirement adjustment with historical time over the studied period. White-collar workers reported better adjustment than blue-collar workers did, and for two of three outcomes, this effect was stable over time. The white-collar workers’ advantage concerning retirement satisfaction, however, increased. We conclude that in Germany, at least for those who retire within the usual time window, adjustment quality has not changed systematically over the examined 18-year period. We only found mixed evidence for a growing social inequality in the retirement adjustment. However, as individual agency in choosing one’s retirement timing and pathway is increasingly restricted, social inequalities in well-being before retirement may increase.

Factors influencing older nurses' decision making around the timing of retirement: An explorative mixed-method study.

This study aimed to understand factors influencing decision making of older nurses around timing of retirement. Global nursing shortages require flexible nurse retention strategies. An explanatory sequential mixed-method approach: nurses across seven health care organisations within one integrated care system responded to an online survey (n = 524). Semistructured interviews and a focus group were conducted (n = 19). Survey data confirmed age as a key factor influencing nurses' decision making. Factors associated with retention were flexible working conditions, financial considerations and feeling valued. Factors associated with attrition were poor or deteriorating health, stress and wish for more time with family and friends. Logit regression confirmed that flexible work patterns are the strongest predictors for working beyond retirement. Qualitative data revealed that retirement plans are accompanied by personal milestones; the work environment heavily influences these plans. Reasons for retirement are multifaceted, but many factors are within the control of employers. Organisational policies, practices and workplace culture have a bearing on decisions surrounding the timing of retirement. Retention strategies that allow older nurses to work part-time are key, and nurse managers need to proactively engage with older nurses to discuss their retirement plans.

Optimal asset allocation, consumption and retirement time with the variation in habitual persistence

In this paper, we study the individual's optimal asset allocation, consumption and retirement time under habitual persistence. To depict the phenomenon that the individual feels equally satisfied with a lower habitual level and is more reluctant to change the habitual level after retirement, we assume that both the level and the sensitivity of the habitual consumption decline at the time of retirement. We establish the concise form of the habitual evolutions, and obtain the optimal retirement time and consumption policy based on martingale and duality methods. The optimal consumption experiences a sharp decline at retirement, but the excess consumption raises because of the reduced sensitivity of the habitual level. This result is consistent with the evidence observed in the “retirement consumption puzzle”. Particularly, the optimal retirement and consumption policies are balanced between the wealth effect and the habitual effect. Larger wealth increases consumption, and larger growth inertia (sensitivity) of the habitual level decreases consumption and brings forward the retirement time.

The Effect of Pension Subsidies on the Retirement Timing of Older Women

Abstract I estimate the effect of additional pension benefits on women’s retirement decisions by examining a German pension subsidy program. The subsidies have a kinked relationship with the recipients’ past pension contributions, creating a sharply different slope of benefits for similar women on either side of the kink point. I find that a 100 euro increase in the monthly benefit induces female recipients to claim their pensions six months earlier. Recipients also adjust their labor supply by using unemployment insurance as a stepping stone to retirement and by reducing the time spent in marginal employment. A back-of-the-envelope calculation suggests that the ratio of behavioral to mechanical costs for this subsidy program is 0.25, which is smaller than that of many other income support programs. (JEL: H55, J18, J21, J26)

The effect of 31st year pension enhancement on mid- and late-career retirement decisions

ABSTRACT A majority of career teachers in Missouri defined benefit pension plan reach their pension wealth peak before their 31st year of service. The 2002 pension enhancement in Missouri generates a local gain in pension wealth that is lower than the peak and also creates an eligibility milestone at the 31st service year. To test whether the 31st year enhancement affects retirement timing decisions for mid- to late-career teachers, I use administrative data of Missouri teachers and employ difference-in-differences models. I find that the 31st year enhancement reduces the likelihood of retirement at early and full retirement eligibilities, and helps retain experienced teachers.

Unfinished business.

At the time of my retirement there were two topics that I considered unfinished business. The first is the Evolution of Sex Differences and the second, the she-male controversy in the Canadian red-sided snake (Thamnophis sirtalis parietalis). These questions are developed in this perspective.

The Impact of the COVID-19 Pandemic on the Working Lives and Retirement Timing of Older Nurses in Ireland.

COVID-19 profoundly affected Irish citizens. The effects have been especially pronounced for nurses in front-line, clinical and management roles. This article discusses the national and employer policy context relevant to nurses in Ireland. There have been staff and bed shortages in public hospitals since austerity policies were introduced following the global financial crisis. Government measures responding to the pandemic include initial ‘cocooning’ of older citizens, travel restrictions, changed working conditions and restricted availability of childcare. This article draws on interviews with 25 older nurses in 2021, sixteen women and nine men, aged 49 or over in Ireland. It explores older nurses’ experiences of COVID-19 and asks what are the implications for their working conditions and retirement timing intentions. A gendered political economy of ageing approach and thematic analysis reveals that while some nurses responded positively to the pandemic, some experienced adverse health impacts, stress and exhaustion; some reported a fear of contracting COVID-19 and of infecting their families; several women nurses decided to retire earlier due to COVID-19. The implications of the findings for employer and government policy and for research are discussed.

Optimal management of defined contribution pension funds under the effect of inflation, mortality and uncertainty

In the present work, we study the problem of optimal management of defined contribution pension funds, during the distribution phase, under the effect of inflation, mortality and model uncertainty. More precisely, we consider a class of employees, who, at the time of retirement, enter a life assurance contract with the same insurance firm. The fund manager of the firm collects the entry fees to a portfolio savings account and this wealth is to be invested optimally in a Black–Scholes type financial market. As such schemes usually last for many years, we extend our framework, by: (i) augmenting the financial market with an inflation-adjusted bond, and, (ii) taking into account mortality of the fund members. Model uncertainty aspects are introduced as the fund manager does not fully trust the model he/she faces. By resorting to robust control and dynamic programming techniques, we provide: (a) closed-form solutions for the case of the exponential utility function, (b) a detailed study of the qualitative features of the problem at hand that elucidates the effect of robustness and inflation on the optimal investment decisions.

Planned Retirement Timing in Europe: Are Europeans Adapting to the Policy of Extending Working Lives.

As populations are ageing concerns regarding the sustainability of European welfare states have come to the forefront. In reaction, policy makers have implemented measurements aimed at the prolongation of working lives. This study investigates weather older workers have adapted their planned retirement age, as a result of this new policy credo. Based on data from Survey of Health, Ageing and Retirement in Europe (SHARE) the analysis shows an increase of the planned retirement age (1.36 years) across all ten European countries investigated, albeit with country-specific variations. Variations on the individual level can be detected in regard to gender, education and self-reported health status.

Navigating conflicting logics: Early or late(r) retirement in the German teaching profession?

Drawing on the institutional logics perspective and life course theory, we explore conflicting logics related to retirement: early retirement versus late(r) retirement in line with extended working life policies. Using qualitative interview data collected in a multiple nested case study, we explore how secondary school teachers in a German School District conceptualise these conflicting logics in the context of factors at the micro-individual, meso-organisation and macro-policy level of analysis that enabled and/or constrained retirement transitions. We further explore teachers’ narratives to evaluate how they navigated these multi-level factors and whether they were able to control and/or plan retirement timing. Our findings indicate that conflicting logics were perceived similarly by the individuals in our study, but that they navigated these logics differently depending on existing experiences related to career proactivity and changes to professional identities. Using five narratives based on four extreme cases, we outline how individuals were able to use human agency when navigating factors that influenced their anticipated retirement transitions, but this was mostly seen as a strategic adaptation to their constraining external environment rather than rational choice.

PENSION REFORM - GOALS AND ESTIMATED RESULTS

PENSION REFORM - GOALS AND ESTIMATED RESULTS

Pensions and Timing of Retirement: The Case of the Public Service Pension Scheme in Uganda

Unsustainable defined-benefit public pension scheme, rising life expectancy, and high level of unemployment endanger the socioeconomic and political stability of Uganda’s economy. This research approaches the problem from labor supply point of view by: (i) analyzing the effect of the public service pension scheme on timing of retirement; (ii) investigating the required early retirement incentives that would increase employment in the public service; and (iii) determining the predictors of postretirement employment in the public service in Uganda. Using a cross sectional secondary dataset of the retired public servants from the Uganda’s Pension Department of the Ministry of Public Service (2016), this study finds the model fitting the observed aggregate retirement behavior very well. Results reveal: first, that the retirement conditions in the public service’s pension scheme in terms of the: mandatory retirement age (MRA), early retirement age (ERA), minimum tenure (MT), and pension benefits; significantly influence timing of retirement. This implies that the public service pension scheme in Uganda can be used as a fiscal tool for addressing labor supply challenges in the country.Second, about 20 percent increment in the monthly pension benefits, and 10-year increment in ERA jointly with a 5-year increment in MRA raises the likelihood of new jobs pace by up to 12.2 percent and 30 percent respectively, through early retirement.This implies that these early retirement incentives can be used to achieve intra-generational equity where some previously employed public servants retire early and survive on pension benefits as few unemployed people join public service to earn a wage.Third, among other predictors, postretirement employment in the public service is explained by:entry age, tenure, and salary. These factors can be used by the government to achieve a sustainable pension scheme through oldage employment (increased labor supply) which reduces the years taken to claim pension benefits.

Retirement in Western Germany – How Workplace Tasks Influence Its Timing

In this article, task data from the German Qualification and Career Survey (BIBB/IAB) is matched against the Sample of Integrated Labour Market Biographies (SIAB) to investigate what patterns are discernible in retirement between 1985 and 2005 in Western Germany. Set against a background of pension reforms and substantial structural change, the article asks whether the nature of occupational tasks has any significant effect on the timing of retirement. Through the use of event history analysis, the article reveals that having a large percentage of routine manual tasks in one’s job is associated with a greater likelihood of a job holder leaving employment, while having medium to high percentages of non-routine manual tasks in one’s job will tend to decrease that likelihood. There is also evidence that holding a job that includes a medium to high concentration of analytical and interactive tasks will tend to reduce the likelihood of early retirement.

‘What could make me stay at work’: Retirement transition profiles

Aging populations pose a persistent challenge to the sustainability of public pension systems. To tackle these financial pressures, many countries strengthen the incentives to work by increasing the statutory retirement age and reducing early retirement benefits. These policy reforms make retirement a topic of utmost importance for individuals, organizations, and societies. Although retirement predictors are already a widely studied topic in the literature, there is still much to investigate about why people decide to retire when they do. In particular, the role of work-related variables in the retirement decision-making process is still not fully understood. Thus, the aim of this study was to examine how individual and work factors influence retirement timing (early, on-time, and later retirement). Forty-one interviews were conducted, and data were subjected to content analysis. The inter-relationship between the multiple categories was analyzed by a Multiple Correspondence Analysis (MCA) combined with Cluster Analysis. Results revealed three distinct profiles, which allowed us to group the participants into three clusters. The stay factors profile (e.g., high positive experiences at work, having no dependents, the spouse/partner not being retired) was associated with later retirement. These results can be important for organizations that want and need to retain the best senior talents, by acknowledging that positive experiences at work are associated with older workers’ desire of postponing retirement.

The Impact of Age Stereotypes and Age Norms on Employees' Retirement Choices: A Neglected Aspect of Research on Extended Working Lives.

This article examines how older workers employ internalized age norms and perceptions when thinking about extending their working lives or retirement timing. It draws on semi-structured interviews with employees (n = 104) and line managers, human resource managers and occupational health specialists (n = 52) from four organisations in the United Kingdom. Previous research has demonstrated discrimination against older workers but this is a limiting view of the impact that ageism may have in the work setting. Individuals are likely to internalize age norms as older people have lived in social contexts in which negative images of what it means to be “old” are prevalent. These age perceptions are frequently normalized (taken for granted) in organisations and condition how people are managed and crucially how they manage themselves. How older workers and managers think and talk about age is another dynamic feature of decision making about retirement with implications for extending working lives. Amongst our respondents it was widely assumed that older age would come with worse health—what is more generally called the decline narrative - which served both as a motivation for individuals to leave employment to maximize enjoyment of their remaining years in good health as well as a motivation for some other individuals to stay employed in order to prevent health problems that might occur from an inactive retirement. Age norms also told some employees they were now “too old” for their job, to change job, for training and/or promotion and that they should leave that “to the younger ones”—what we call a sense of intergenerational disentitlement. The implications of these processes for the extending working lives agenda are discussed.

The Relevance of Diet, Physical Activity, Exercise, and Persuasive Technology in the Prevention and Treatment of Sarcopenic Obesity in Older Adults

The aging population faces two conditions that threaten healthy aging: high fat mass (obesity) and low muscle mass and function (sarcopenia). The combination of both—referred to as sarcopenic obesity—synergistically increases the risk of adverse health outcomes. The two conditions often co-occur because they reinforce each other and share common etiologies, including poor nutrition and inactivity. All aging people are at risk of gaining weight and losing muscle mass and could benefit from improvements in physical activity, exercise and dietary intake. one specific window of opportunity is during the transient time of retirement, as older adults already need to restructure their daily activities. It is key to change lifestyle behavior in a sustainable manner, providing scientifically proven, personalized, and acceptable principles that can be integrated in daily life. Health technologies (e.g., applications) can provide promising tools to deliver personalized and appealing lifestyle interventions to a large group of people while keeping health care costs low. Several studies show that health technologies have a strong positive effect on physical activity, exercise and dietary intake. Specifically, health technology is increasingly applied to older people, although strong evidence for long term effects in changing lifestyle behavior is generally lacking. Concluding, technology could play an important role in the highly warranted prevention of sarcopenic obesity in older adults. Although health technology seems to be a promising tool to stimulate changes in physical activity, exercise and dietary intake, studies on long lasting effects and specifically targeted on older people around the time of retirement are warranted.

On retirement time decision making

Optimal timing of retirement is an important part of retirement planning. We consider three types of individuals distinguished by the way they use information when deciding the retirement time. For each of these types, we analyze two elements influencing the decision, the market model and the mortality model, and we study the impact of working with one combination or another. Based on analytical solutions to almost all the combinations, we reach a conclusion, even relevant for practical advice: Young individuals must prioritize the market model over the mortality model while for older individuals, it is the other way around.

Trajectories of work ability from mid-life to pensionable age and their association with retirement timing

BackgroundThis study aimed to identify the trajectories of work ability over 16 years preceding the individual pensionable age and to examine the association with retirement timing.MethodsThe study population consisted of...