The Evolution of Retirement Incentives in the U.S.
Employment rates of older men and women in the U.S. have been rising for the past several decades. Over the same period, there have been significant changes in Social Security and private pensions, which may have contributed to this trend. In this study, we examine how the financial incentive to work at older ages has evolved since 1980 as a result of changes in Social Security and private pensions. We find that the implicit tax on work after age 65 has dropped by about 15 percentage points for a typical worker as a result of Social Security reforms; incorporating the change in private pensions, the decline is larger. We provide suggestive evidence that the evolution of retirement incentives has affected retirement behavior.
This paper is part of the National Bureau of Economic Research’s International Social Security (ISS) Project. The author thanks other members of the ISS team for helpful suggestions that benefitted this analysis and the project as a whole. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
Forthcoming: The Evolution of Retirement Incentives in the U.S., Courtney C. Coile. in Social Security Programs and Retirement around the World: Reforms and Retirement Incentives, Börsch-Supan and Coile. 2020