New Evidence on Pensions, Social Security, and the Timing of Retirement

Using a unique dataset that links the economic and demographic information of households with the details of their pension formulas, I estimate the combined effect of Social Security and pension benefits on the probability of retirement in a cross-section of the population near retirement age. The accrual rate of retirement wealth is shown to be a significant determinant of the probability of retirement. Simulations of extensions in pension coverage comparable to those that occurred in the early postwar period can account for one fourth of the contemporaneous decline in labor force participation rates.