Retirement Decisions; Incentives and Constraints.

Recent studies of retirement have recognized the importance of pension plans and social security on the retirement decisions. A pension system that is neutral with respect to the timing of benefits encourages or discourages the acceptance of these benefits and subsequent job separation at any particular age only to the extent that any asset affects such a decision. A pension system is not neutral when the value of either pensions or social security changes the timing of benefit acceptance. Only recently has the degree to which pension plans and social security induce retirement been considered. Burkhauser and Quinn (1980) provide the most detailed study of the relationship between the present social security and employer pension systems and the work behavior of older men. Results confirm that while change in mandatory retirement rules will increase the labor supply of older men, the increase is significantly smaller than would be the case in the presence of actuarially neutral pensions and social secrity. Better information on pension systems and their effect on individual behavior could be arrived at if the perceived future health, inflation, post-retirement work, and actual and expected retirement behavior would also be considered. (YLB)