Why do More Older Men Work in Some States?

Center for Retirement Research at Boston College, 2008

Posted: 9 Mar 2010

See all articles by Alicia H. Munnell

Alicia H. Munnell

Boston College - Center for Retirement Research

Mauricio Soto

International Monetary Fund (IMF)

Natalia Zhivan

Boston College - Center for Retirement Research

Date Written: April 2008

Abstract

With increasing pressure on the nation's retirement systems, questions about how long people stay in the labor force and why they decide to retire are of great importance. The big unknown going forward is whether the contraction of the retirement income system will cause workers to continue working at older ages. The literature to date suggests that the availability of benefits has a larger impact than the level of benefits on people's decision to retire. Indeed, 55 percent of men and 59 percent of women who claimed Social Security benefits in 2005 were 62, the earliest age of eligibility.1 If availability of benefits is the main driver of retirement, future workers will be relatively insensitive to the coming decline in replacement rates from Social Security and employer-sponsored pension plans. On the other hand, if the level of benefits has a significant impact, future declines could trigger increased work.

One avenue of investigation not previously explored is the variation in labor force activity of older workers across different states. In South Dakota, nearly 90 percent of men aged 55-64 are in the labor force compared to only 40 percent in West Virginia. The question is the extent to which this variation can be explained by differences in replacement rates benefits relative to pre-retirement income across states...

Suggested Citation

Munnell, Alicia and Soto, Mauricio and Zhivan, Natalia, Why do More Older Men Work in Some States? (April 2008). Center for Retirement Research at Boston College, 2008. Available at SSRN: https://ssrn.com/abstract=1118950

Alicia Munnell (Contact Author)

Boston College - Center for Retirement Research ( email )

Fulton Hall 550
Chestnut Hill, MA 02467
United States
617-552-1762 (Phone)

Mauricio Soto

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Natalia Zhivan

Boston College - Center for Retirement Research ( email )

Fulton Hall 550
Chestnut Hill, MA 02467
United States

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