Retirement Incentives: The Interaction between Employer-Provided Pensions, Social Security, and Retiree Health Benefits

Lumsdaine, Robin L.; Stock, James H.; Wise, David A.

Retirement Incentives: The Interaction between Employer-Provided Pensions, Social Security, and Retiree Health Benefits

64 Pages Posted: 18 May 2000 Last revised: 16 Aug 2010

Robin L. Lumsdaine

American University - Department of Finance and Real Estate; Erasmus University Rotterdam (EUR) - Department of Econometrics; National Bureau of Economic Research (NBER)

James H. Stock

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); Harvard University - Harvard Kennedy School (HKS)

David A. Wise

National Bureau of Economic Research (NBER); Harvard University - Harvard Kennedy School (HKS)

Date Written: January 1994

Abstract

Proposed changes in the U.S. Social Security provisions include increasing the normal retirement age from 65 to 67 and changing from 3% to 8% the increase in benefits for each year that retirement is delayed after normal retirement. The paper considers the interaction between these changes and the provisions of employer-provided pension plans. For persons with an employer-provided defined benefit plan, the conclusion is that the Social Security changes will have little effect on labor force participation, but that changes in the firm plan - like increasing the early retirement age - would have very large effects on labor force participation.

Suggested Citation: Suggested Citation

Lumsdaine, Robin L. and Stock, James H. and Wise, David A., Retirement Incentives: The Interaction between Employer-Provided Pensions, Social Security, and Retiree Health Benefits (January 1994). NBER Working Paper No. w4613. Available at SSRN: https://ssrn.com/abstract=227962