Retirement Incentives and Couples' Retirement Decisions

Abstract

The typical family in the US is now a dual-earner couple, yet relatively few studies examine the retirement decision in a household context. This paper explores how husbands' and wives' retirement behavior is influenced by their own financial incentives from Social Security and private pensions and by spillover effects' from their spouses' incentives. I find that men and women are similarly responsive to their own incentives. I further find that men are very responsive to their wives' incentives but that women are not responsive to their husbands' incentives and present evidence to suggest that this may be due to asymmetric complementarities of leisure. Policy simulations suggest that the omission of spillover effects will bias the estimated effect of changing Social Security policy on men's labor force participation.