Does Retiree Health Insurance Encourage Early Retirement?
50 Pages Posted: 31 Dec 2011 Last revised: 17 May 2023
There are 2 versions of this paper
Does Retiree Health Insurance Encourage Early Retirement?
Does Retiree Health Insurance Encourage Early Retirement?
Date Written: December 2011
Abstract
The strong link between health insurance and employment in the United States may cause workers to delay retirement until they become eligible for Medicare at age 65. However, some employers extend health insurance benefits to their retirees, and individuals who are eligible for such retiree health benefits need not wait until age 65 to retire with group health coverage. We investigate the impact of retiree health insurance on early retirement using employee-level data from 64 diverse firms that are clients of Towers Watson, a leading benefits consulting firm. We find that retiree health coverage has its strongest effects at ages 62 and 63, resulting in a 3.7 percentage point (21.2 percent) increase in the probability of turnover at age 62 and a 5.1 percentage point (32.2 percent) increase in the probability of turnover at age 63; it has a more modest effects for individuals under the age of 62. A more generous employer contribution of 50 percent or more raises turnover by 1-3 percentage points at ages 56-61, by 5.9 percentage points (33.7 percent) at age 62, and by 6.9 percentage points (43.7 percent) at age 63. Overall, an employer contribution of 50 percent or more reduces the total number of person-years worked between ages 56 and 64 by 9.6 percent relative to no coverage.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Retirement and the Evolution of Pension Structure
By Leora Friedberg and Anthony Webb
-
Explaining the Evolution of Pension Structure and Job Tenure
By Leora Friedberg and Michael Owyang
-
How Does Job Loss Affect the Timing of Retirement?
By Sewin Chan and Ann Huff Stevens
-
Wealth Shocks and Retirement Timing: Evidence from the Nineties
By Purvi Sevak
-
Defined Contribution Plans, Defined Benefit Plans, and the Accumulation of Retirement Wealth
By James M. Poterba, Joshua D. Rauh, ...
-
Bulls, Bears, and Retirement Behavior
By Courtney Coile and Phillip B. Levine
-
Labor Market Shocks and Retirement: Do Government Programs Matter?
By Courtney Coile and Phillip B. Levine
-
By Alan L. Gustman, Thomas L. Steinmeier, ...
-
The Effect of Inheritance Receipt on Retirement
By Jeffrey R. Brown, Courtney Coile, ...