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What Triggers Early Retirement? Results from Swiss Pension Funds

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Author Info
Bütler, Monika
Huguenin, Olivia
Teppa, Federica

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Abstract

Early retirement is predominantly considered as the result of incentives set by social security and the tax system. But people seem to retire early even in the absence of such distortions, as the Swiss example demonstrates. We look for determinants of early retirement, in particular the role of lifetime income and family status, using individual data from a selection of Swiss pension funds. Our findings suggest that affordability is a key determinant in retirement decisions: more affluent men and – to a much smaller extent – women tend to leave the work force earlier. The fact that early retirement has become much more prevalent in the last 15 years is another indicator for the importance of affordability as Switzerland’s funded pension system has matured over that period leading to higher effective replacement rates. We also find sizeable differences in retirement behaviour across marital status. These may be explained by a constrained rational choice based on differential mortality and the desire of couples to coordinate their entry into retirement.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4394.

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Date of creation: May 2004
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Handle: RePEc:cpr:ceprdp:4394

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Related research
Keywords: duration models occupational pension retirement decision

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Find related papers by JEL classification:
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

References listed on IDEAS
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    Other versions:
  12. Blau, David M, 1998. "Labor Force Dynamics of Older Married Couples," Journal of Labor Economics, University of Chicago Press, vol. 16(3), pages 595-629, July. [Downloadable!] (restricted)
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    Other versions:
  17. Alan L. Gustman & Thomas L. Steinmeier, 1994. "Retirement in a Family Context: A Structural Model for Husbands and Wives," NBER Working Papers 4629, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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    Other versions:
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    Other versions:
  20. Craig, Ben & Batina, Raymond G., 1991. "The effects of social security in a life cycle family labor supply simulation model," Journal of Public Economics, Elsevier, vol. 46(2), pages 199-226, November. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Justina A.V. Fischer & Alfonso Sousa-Poza, 2006. "The Institutional Determinants of Early Retirement in Europe," University of St. Gallen Department of Economics working paper series 2006 2006-08, Department of Economics, University of St. Gallen. [Downloadable!]
  2. Hannu Piekkola & Matthias Deschryvere, 2004. "Retirement Decisions and Option Values: Their Application Regarding Finland," Discussion Papers 951, The Research Institute of the Finnish Economy. [Downloadable!]
  3. David Dorn & Alfonso Sousa-Poza, 2007. "‘Voluntary’ and ‘Involuntary’ Early Retirement: An International Analysis," IZA Discussion Papers 2714, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Estelle James & Alejandra Cox Edwards, 2005. "Do Individual Accounts Postpone Retirement: Evidence from Chile," Working Papers wp098, University of Michigan, Michigan Retirement Research Center. [Downloadable!]
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