Predicting Early Retirement
The question itself—“Why retire early?”—is of recent vintage. Although (xcRansom and Sutch 1986) detected evidence of a slight trend toward younger retirement ages prior to 1930, it has been mainly since the 1930s, and still more especially since 1960, that the event of “early retirement” has grown into a phenomenon of considerable size and political-economic significance on a population basis. As recently as the late 1970s the chief focus of interest in most studies of retirement behavior was still linked to the “normal retirement age,” age 65, even though the labor-force participation rate of men as young as 60 had by then already declined to about 75 percent. With enactment of the 1978 amendments to the Age Discrimination in Employment Act, the research focus began to shift, initially to questions about the importance of mandatory retirement regulations and in particular to the sometimes controversial issue of whether removal of mandated retirement ages would retard the trend toward earlier and earlier retirements (see (xcLevine 1988). A series of analyses by Burkhauser and Quinn demonstrated that the impact of mandated ages was much less than had been supposed (for a review of the studies, see (xcQuinn, Burkhauser, and Myers 1990), pp. 77–87). The difference between supposition and evidence was largely due to a coincidence between the presence of age mandates and the presence of private pension plans: nearly all of the workers who faced a mandatory retirement age were qualified for employer-provided pension plans, and the plans generally contained financial incentives in favor of retirement before age 65.
KeywordsWage Rate Early Retirement Pension Plan Pension Benefit Contract Period
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