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Life-Cycle Models: Lifetime Earnings and the Timing of Retirement

Author Info

Listed author(s):
  • John Laitner

    (University of Michigan)

  • Dan Silverman

    (University of Michigan)

Abstract

After dropping for a century, the average retirement age for U.S. males seems to have leveled off in recent decades. An important question is whether as future improvements in technology cause wages to rise, desired retirement ages will resume their downward trend, or not. This paper attempts to use HRS panel data to test how relatively high (or low) earnings affect male retirement ages. Our goal is to use cross-sectional earning differences to help anticipate likely time-series developments in coming decades. Our preliminary regression results show that higher earnings do lead to somewhat earlier retirement. Unless additional analysis changes the parameter estimates, the implication is that the downward trend in male retirement ages will ultimately return.

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File URL: http://www.mrrc.isr.umich.edu/publications/Papers/pdf/wp165.pdf
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Paper provided by University of Michigan, Michigan Retirement Research Center in its series Working Papers with number wp165.

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Length: 25 pages
Date of creation: Oct 2007
Handle: RePEc:mrr:papers:wp165
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Web page: http://www.mrrc.isr.umich.edu/publications/papers/
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  1. Eric French, 2005. "The Effects of Health, Wealth, and Wages on Labour Supply and Retirement Behaviour," Review of Economic Studies, Oxford University Press, vol. 72(2), pages 395-427.
  2. Michael Hurd & Susann Rohwedder, 2003. "The Retirement-Consumption Puzzle: Anticipated and Actual Declines in Spending at Retirement," Working Papers 03-12, RAND Corporation.
  3. Gustman, Alan L & Steinmeier, Thomas L, 1986. "A Structural Retirement Model," Econometrica, Econometric Society, vol. 54(3), pages 555-584, May.
  4. Bound, John & Schoenbaum, Michael & Stinebrickner, Todd R. & Waidmann, Timothy, 1999. "The dynamic effects of health on the labor force transitions of older workers," Labour Economics, Elsevier, vol. 6(2), pages 179-202, June.
  5. John Laitner & Dan Silverman, 2005. "Estimating Life-Cycle Parameters from Consumption Behavior at Retirement," NBER Working Papers 11163, National Bureau of Economic Research, Inc.
  6. John Rust & Christopher Phelan, 1997. "How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets," Econometrica, Econometric Society, vol. 65(4), pages 781-832, July.
  7. Gustman, Alan L & Steinmeier, Thomas L, 2000. "Retirement in Dual-Career Families: A Structural Model," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 503-545, July.
  8. David Altig, 2001. "Simulating Fundamental Tax Reform in the United States," American Economic Review, American Economic Association, vol. 91(3), pages 574-595, June.
  9. Daniel S. Hamermesh, 2005. "Why Not Retire? The Time and Timing Costs of Market Work," Working Papers wp104, University of Michigan, Michigan Retirement Research Center.
  10. Mark Aguiar & Erik Hurst, 2004. "Consumption vs. Expenditure," NBER Working Papers 10307, National Bureau of Economic Research, Inc.
  11. Charles Brown, "undated". "Early Retirement Windows," Pension Research Council Working Papers 98-17, Wharton School Pension Research Council, University of Pennsylvania.
  12. Nicole Maestas, 2004. "Back to Work: Expectations and Realizations of Work After Retirement," Working Papers wp085, University of Michigan, Michigan Retirement Research Center.
  13. King, Robert G. & Plosser, Charles I. & Rebelo, Sergio T., 1988. "Production, growth and business cycles : I. The basic neoclassical model," Journal of Monetary Economics, Elsevier, vol. 21(2-3), pages 195-232.
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