NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Disability Insurance Incentives and the Retirement Decision: Evidence from the United States

Courtney Coile

Chapter in NBER book Social Security Programs and Retirement Around the World: Disability Insurance Programs and Retirement (2016), David A. Wise, editor (p. 45 - 80)
Conference held September 26-28, 2013
Published in January 2016 by University of Chicago Press
© 2016 by the National Bureau of Economic Research
in NBER Book Series - International Social Security

A rising share of older workers in the United States makes use of the Disability Insurance (DI) program in their transition to retirement, with about one in seven men and one in nine women between the ages of 60 and 64 now enrolled in the program. This study explores how financial incentives from Social Security and DI affect retirement decisions, using an option value approach. We find that financial incentives have a significant effect on retirement, particularly for those who are in poor health or who have low education, who may be more actively considering retirement at younger ages. Simulations suggest that increasing the stringency of the screening process for DI would increase the expected working life of DI applicants.

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Document Object Identifier (DOI): https://doi.org/10.7208/chicago/9780226262604.003.0001

This chapter first appeared as NBER working paper w20916, Disability Insurance Incentives and the Retirement Decision: Evidence from the U.S., Courtney Coile
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