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Early Retirement Windows

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  • Charles Brown

Abstract

An early retirement window is an offer, by an employer, of a special incentive to retire at a particular time, beyond that provided by the firm's pension plan. While such windows have attracted increasing attention in the academic literature and the business press, most of our current knowledge about them is based on case studies or compensation consultants' surveys of their clients. The Health and Retirement Study provides an opportunity to analyze the incidence and consequences of such offers among a representative sample of workers who are in the age range (51-61 in 1992) where such windows may be important. HRS data suggest that window offers increased in the early 1990s. At their peak in the mid- 1990s, employers were making about 5 offers per 100 workers age 55-59. One third of the offers were accepted. The economic impact of window offers depends on the extent to which those who accept such offers would have left the employer soon anyway, and those who are induced to leave one employer go to work elsewhere. But multiplying the frequency of such offers by the acceptance rate suggests a substantial potential impact on the employment of workers in the HRS age range. Window offers are generally made to workers in "career" jobs. Such workers have aboveaverage education, tenure with employer, and earnings. The attachment between the employer and such workers is often strengthened by defined-benefit pension plans, which discourage leaving before the early-retirement age of the pension plan but often also provide sharp incentives to leave "on time". Workers who received window offers were closer to early retirement age (as defined by their pension plan), and were expecting to retire sooner than other workers. Thus, one might expect that those who receive window offers would have retired earlier than other workers, even without the special window incentive. On the other hand, those receiving window offers are better paid and in better health than t
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Charles Brown, "undated". "Early Retirement Windows," Pension Research Council Working Papers 98-17, Wharton School Pension Research Council, University of Pennsylvania.
    • Handle: RePEc:wop:pennpr:98-17
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    Cited by:

    1. is not listed on IDEAS
    2. Daniel Hallberg, 2011. "Economic Fluctuations and Retirement of Older Employees," LABOUR, CEIS, vol. 25(3), pages 287-307, September.
    3. John Laitner, 2003. "Labor Supply Responses to Social Security," Working Papers wp050, University of Michigan, Michigan Retirement Research Center.
    4. Randall K. Filer & Marjorie Honig, 2005. "Endogenous Pensions and Retirement Behavior," Economics Working Paper Archive at Hunter College 410, Hunter College Department of Economics.
    5. Alan L. Gustman & Thomas L. Steinmeier, 2004. "How to Evaluate the Effects of Social Security Policies on Retirement and Saving When Firm Policies Affect the Opportunities Facing Older Individuals," Working Papers wp078, University of Michigan, Michigan Retirement Research Center.
    6. John Laitner & Dan Silverman, 2007. "Life-Cycle Models: Lifetime Earnings and the Timing of Retirement," Working Papers wp165, University of Michigan, Michigan Retirement Research Center.
    7. Alan L. Gustman & Thomas L. Steinmeier, 2004. "Minimum Hours Constraints, Job Requirements and Retirement," NBER Working Papers 10876, National Bureau of Economic Research, Inc.
    8. Andrew E. Clark & Yarine Fawaz, 2009. "Valuing Jobs Via Retirement: European Evidence," National Institute Economic Review, National Institute of Economic and Social Research, vol. 209(1), pages 88-103, July.
    9. Leora Friedberg & Michael T. Owyang, 2004. "Explaining the evolution of pension structure and job tenure," Working Papers 2002-022, Federal Reserve Bank of St. Louis.
    10. Coe, N.B. & Lindeboom, M., 2008. "Does Retirement Kill You? Evidence from Early Retirement Windows," Discussion Paper 2008-93, Tilburg University, Center for Economic Research.
    11. Charles Brown, "undated". "Early Retirement Windows," Pension Research Council Working Papers 98-17, Wharton School Pension Research Council, University of Pennsylvania.
    12. Alan L. Gustman & Olivia S. Mitchell & Thomas L. Steinmeier, 1994. "Retirement Research Using the Health and Retirement Survey," NBER Working Papers 4813, National Bureau of Economic Research, Inc.
    13. Leora Friedberg & Anthony Webb, 2005. "Retirement and the Evolution of Pension Structure," Journal of Human Resources, University of Wisconsin Press, vol. 40(2).

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