TY - JOUR AU - Nyce,Steven AU - Schieber,Sylvester AU - Shoven,John B. AU - Slavov,Sita AU - Wise,David A. TI - Does Retiree Health Insurance Encourage Early Retirement? JF - National Bureau of Economic Research Working Paper Series VL - No. 17703 PY - 2011 Y2 - December 2011 UR - http://www.nber.org/papers/w17703 L1 - http://www.nber.org/papers/w17703.pdf N1 - Author contact info: Steven Nyce Towers Watson 901 North Glebe Road Arlington, VA 22203 E-Mail: steven.nyce@towerswatson.com Sylvester Schieber Towers Watson 901 North Glebe Road Arlington, VA 22203 Tel: 703/258-8000 Fax: 703/258-8585 E-Mail: syl.schieber@gmail.com John B. Shoven Department of Economics 579 Serra Mall at Galvez Street Stanford, CA 94305-6015 Tel: 650/723-3273 Fax: 650/723-8611 E-Mail: shoven@stanford.edu Sita Slavov American Enterprise Institute 1150 17th Street, NW Washington, DC 20036 Tel: 202/862-7161 E-Mail: sita.slavov@aei.org David A. Wise NBER 1050 Massachusetts Avenue Cambridge, MA 02138 E-Mail: dwise@nber.org M2 - featured in NBER digest on 2012-05-01 AB - The strong link between health insurance and employment in the United States may cause workers to delay retirement until they become eligible for Medicare at age 65. However, some employers extend health insurance benefits to their retirees, and individuals who are eligible for such retiree health benefits need not wait until age 65 to retire with group health coverage. We investigate the impact of retiree health insurance on early retirement using employee-level data from 64 diverse firms that are clients of Towers Watson, a leading benefits consulting firm. We find that retiree health coverage has its strongest effects at ages 62 and 63, resulting in a 3.7 percentage point (21.2 percent) increase in the probability of turnover at age 62 and a 5.1 percentage point (32.2 percent) increase in the probability of turnover at age 63; it has a more modest effects for individuals under the age of 62. A more generous employer contribution of 50 percent or more raises turnover by 1-3 percentage points at ages 56-61, by 5.9 percentage points (33.7 percent) at age 62, and by 6.9 percentage points (43.7 percent) at age 63. Overall, an employer contribution of 50 percent or more reduces the total number of person-years worked between ages 56 and 64 by 9.6 percent relative to no coverage. ER -