The increasing heterogeneity of retirement in the USA: Interactions between state, firm, and individual determinants of later-life labor force withdrawal

The confluence of several institutional forces-Social Security benefit improvements and the availability of early retirement, the growth of employer-sponsored defined-benefit pension plans, and mandatory retirement ages-led to sustained early labor force withdrawal in the 1970s and 1980s. As these institutional forces were desynchronized and/or dismantled, the labor force participation rates of US workers age 55 and above began increasing in the mid-1990s. Warner shows, however, that this desynchronization of the state and firm institutional supports has led not simply to delayed retirement but to growing heterogeneity in retirement timing as workers’ household and individual characteristics have become increasingly consequential. Indeed, even as Social Security reform and changes in firm benefits incentivize delayed retirement, the retention of early Social Security retired-worker benefits at age 62 suggests that high levels of early retirement among the most disadvantaged workers will continue to anchor the growing heterogeneity in labor force withdrawal timing.