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The great recession and changes in faculty expected retirement age

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  • Kathleen Arano
  • Carl Parker

Abstract

The great recession of 2008 has shifted retirement plans of workers in general. This paper examines the changes in expected retirement age following the great recession of 2008 of a subset of the labor force—university faculty who are near retirees and participate in a defined contribution retirement plan. We find evidence consistent with the life-cycle model which predicts changes in expected retirement age when there are unexpected changes in retirement wealth. For the faculty who expected to delay planned retirement, the average delay is 4 years. Regression estimates indicate a longer time horizon moderates the delay in expected retirement. We also find evidence that expected wealth at retirement amplifies the delay in expected retirement age while current value of retirement wealth moderates the delay in planned retirement. Copyright Springer Science+Business Media New York 2016

Suggested Citation

  • Kathleen Arano & Carl Parker, 2016. "The great recession and changes in faculty expected retirement age," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 40(1), pages 127-136, January.
    • Handle: RePEc:spr:jecfin:v:40:y:2016:i:1:p:127-136
    DOI: 10.1007/s12197-014-9294-2
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    References listed on IDEAS

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    1. Purvi Sevak, 2002. "Wealth Shocks and Retirement Timing: Evidence from the Nineties," Working Papers wp027, University of Michigan, Michigan Retirement Research Center.
    2. Gopi Shah Goda & John B. Shoven & Sita Nataraj Slavov, 2011. "What Explains Changes in Retirement Plans during the Great Recession?," American Economic Review, American Economic Association, vol. 101(3), pages 29-34, May.
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    4. Courtney C. Coile & Phillip B. Levine, 2006. "Bulls, Bears, and Retirement Behavior," ILR Review, Cornell University, ILR School, vol. 59(3), pages 408-429, April.
    5. Coile Courtney C & Levine Phillip B, 2011. "The Market Crash and Mass Layoffs: How the Current Economic Crisis May Affect Retirement," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-42, April.
    6. Brooke Helppie McFall, 2011. "Crash and Wait? The Impact of the Great Recession on the Retirement Plans of Older Americans," American Economic Review, American Economic Association, vol. 101(3), pages 40-44, May.
    7. Alan L. Gustman & Thomas L. Steinmeier & Nahid Tabatabai, 2010. "What the Stock Market Decline Means for the Financial Security and Retirement Choices of the Near-Retirement Population," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 161-182, Winter.
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    Cited by:

    1. Rosalía Romero Tena & Cristina Mayor Ruiz & Carmen Yot Domínguez & Manuel Chaves Maza, 2020. "Structural Equation Models on the Satisfaction and Motivation for Retirement of Spanish University Professors," Social Sciences, MDPI, vol. 9(4), pages 1-19, April.

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    More about this item

    Keywords

    Expected retirement age; Great recession; University faculty; Retirement plans; Wealth shock; J26; J10;
    All these keywords.

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General

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