We present quasi-experimental evidence on the effects of increasing the Early Retirement Age (ERA) on older workers' retirement decisions. The analysis is based on social security reforms in Austria in 2000 and 2004, and administrative data allows us to distinguish between pension claims and job exits. Using a Regression Kink Design, we estimate that, within a birth cohort, a 1.0 year increase in the ERA leads to a 0.4 year increase in the average job exiting age and a 0.5 year increase in the average pension claiming age. When the ERA increases, many older workers remain in their jobs longer.
The process of retirement begins with attitudes toward retirement, retirement policies, & factors in the decision to retire. Currently, high levels of desire for retirement & poor health cause most retirements to occur at or near the minimum age for retirement. The retirement transition has varying effects, depending on how the individual arrives at retirement. Those retiring voluntarily have little or no difficulty adjusting. Those forced out by mandatory retirement policies tend to be dissatisfied at first, but eventually adjust. And those retiring because of poor health are understandably the most dissatisfied, although retirement improves health for many of them. Retirement itself has no predictable negative effect on physical health, self-esteem, or life satisfaction. It does tend to reduce activity level. A good adjustment in the retirement years depends on having a secure income, good health, meaningful activities, & high marital satisfaction. Given income & health, most retired persons adjust well. However, retirement income systems & health care financing systems in the US are losing ground, & gaps in coverage are widening. This situation poses a serious threat to the future of retirement. HA.