Retirement Age Trap: RDD Approach to Terminated Retirement Spells

Regression discontinuity (RD) analysis of retirement durations and retiree death ages is conducted with the Finnish year 1947 birth cohort. Data consist of observations from the sample follow-up period in 1.1.2007 – 31.12.2019. For the year 1947 cohort the eligible retirement age with old-age pension is between the ages of 63 and 68 years. However, the observed pension ages are quite often less than 63 years although the statutory minimum retirement age regulates persons’ retirement times. This means that for some retirees age of 63 years constitutes a queuing age that is against their retirement intentions, and this affects their retirement spells. We find with RD methods that close after death age of 63 years, the retirement spells discontinuously shortens although the higher death age should give room for the longer retirement spells. The point estimates for regression discontinuity effects on terminated retirement spells are in the range of from –1.09 to –0.56 in loss of year depending on the used sub-samples, covariates, and estimation methods. These findings are interpreted to conflict retirement intentions of retirees retiring at age of 63 years.