Pathways to Retirement Through Self-Employment

38 Pages Posted: 4 Jul 2017

See all articles by Shanthi Ramnath

Shanthi Ramnath

U.S. Department of the Treasury, Office of Tax Analysis (OTA)

John B. Shoven

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Sita Slavov

George Mason University - School of Policy, Government, and International Affairs

Date Written: June 2017

Abstract

We examine the role of self-employment in retirement transitions using a panel of administrative tax data. We find that the hazard of self-employment increases at popular retirement ages associated with Social Security eligibility, particularly for those with greater retirement wealth. Late-career transitions to self-employment are associated with a larger drop in income than similar mid-career transitions. Data from the Health and Retirement Study suggest that hours worked also fall upon switching to self-employment. These results suggest that self-employment at older ages may serve as a “bridge job,” allowing workers to gradually reduce hours and earnings along the pathway to retirement.

Suggested Citation

Ramnath, Shanthi and Shoven, John B. and Slavov, Sita, Pathways to Retirement Through Self-Employment (June 2017). NBER Working Paper No. w23551. Available at SSRN: https://ssrn.com/abstract=2996307

Shanthi Ramnath (Contact Author)

U.S. Department of the Treasury, Office of Tax Analysis (OTA)

1500 Pennsylvania Ave. NW
Washington, DC 20220
United States

John B. Shoven

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States
650-326-5377 (Phone)
650-328-4163 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Sita Slavov

George Mason University - School of Policy, Government, and International Affairs ( email )

Founders Hall
3351 Fairfax Dr.
Arlington, VA 22201
United States

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