Some 2,000 workers in the 50 to 79 age range in the RAND American Life Panel were recently surveyed about factors that would affect their retirement age.
Researchers focused on respondents’ ratings of alternative work-to-retirement pathways, their current and desired job characteristics, subjective probabilities of working past age 70 and doing so if certain job characteristics were available to them.
The survey results, released in a working paper this month by the National Bureau of Economic Research, found that about half the workers surveyed preferred traditional retirement paths — retiring directly and completely from full-time jobs.
Many others preferred a more gradual transition to retirement. About a quarter said they would first take a part-time job, 8% preferred to work for themselves before retirement and one in 10 had no intention of ceasing to work.
Women were likelier to prefer gradual pathways to retirement and less likely to say they would never retire. Part-time employees and those who were self-employed were likelier than full-timers to prefer gradual pathways.
The survey also identified differences among respondents by education, health, psychological factors and their Big 5 personality traits.
Workers decide when and how to retire for a wide variety of factors. These may include their health, abilities and preferences for job characteristics and leisure activities, as well as government regulations and employer demands.
According to the report: “Standard economic theory ignores psychological factors, but our results suggest that they may be useful to understand heterogeneity in the population that is not explained by standard economic variables.”
Researchers found that most respondents worried about health and job demands when they considered working longer, but relatively few were concerned that their employers would not allow them to remain in their jobs.
The survey showed that most older workers wanted to move to a job that was less cognitively and less physically demanding than their current one. In addition, they preferred jobs with more social opportunities, more comfortable temperatures and more flexible schedules.
As to the subjective probabilities of working after age 70, the survey found that the strongest predictors were worries about future job demands, the cognitive requirements of individuals’ desired future jobs, commute times and the existence of flexible work hours.
“Overall, having flexible work hours and having short commutes were the factors that consistently came out as important determinants of retirement across most of our models,” the report said. “Moreover, demands of the jobs, especially the cognitive demands of individuals’ future jobs as well as stress, were also strong predictors of retirement.”
Flexible Work Hours
Researchers analyzed the subjective causal effects of working conditions on respondents’ decision to stay in work after age 70.
The analysis found that flexible work hours would increase the subjective probability of working after age 70 by 15 percentage points on a base of about 17%, and thus have a larger effect than a 20% increase in wages.
Also important, in descending order, were work stress, a job’s physical demands, opportunity to become self-employed, short commuting time and an option to telecommute.
The report said switching to a part-time job at an individual’s current employer would have little effect on labor supply. This suggests, it said, that policies that raise older workers’ ability to work more flexible hours may have the largest influence on delaying their retirement — much more so than the option to take part-time jobs.
Less than half of respondents said they could flexibly choose their work hours, switch to a part-time position or telecommute. “These favorable working conditions are far from universal, among older workers in the U.S.,” according to the report.
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