Working Paper: NBER ID: w18051
Authors: Kevin S. Milligan
Abstract: Governments around the world are reacting to extended lifespans and troubled pension finances by increasing the age of retirement benefit entitlement. One concern that arises is how those who are not working before reaching entitlement age are able to bridge their consumption to the age of entitlement. This paper studies those who retire before the age of full pension entitlement in the United States using data drawn from the Health and Retirement Study. The major finding is that four out of five people who have zero earnings at pre-entitlement ages are able to find a way to lift their incomes over the poverty line. For men, pension and annuity income is important while for women, spousal income helps most to get them over the line. Reaching the early retirement entitlement age at 62 also has a significant impact on poverty avoidance.
Keywords: retirement; social security; poverty; income sources
JEL Codes: J14; J26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| early retirement age of 62 (J26) | poverty avoidance (I32) |
| pension and annuity income (H55) | poverty avoidance (I32) |
| spousal income (J12) | poverty avoidance (I32) |
| higher asset levels (G32) | lower income levels prior to entitlement (H53) |
| government benefits and nonlabor private income (J32) | above poverty threshold (I32) |