The Evolution of Retirement Incentives in the U.S.

Courtney Coile

NBER Working Paper No. 25281
Issued in November 2018
NBER Program(s):Aging

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.

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Acknowledgments

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Document Object Identifier (DOI): 10.3386/w25281

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. 2019