How Do Non-Financial Factors Affect Retirement Decisions?

Financial factors clearly influence retirement deci­sions, as everyone would like to have sufficient income when they leave the workforce. But numer­ous studies find that such factors are only a small part of the story. Non-financial considerations clearly contribute to the decision to retire. This brief reviews studies, mainly by the Social Security Administration’s Retirement Research Con­sortium, that examine how two types of non-financial factors affect retirement decisions: the worker’s on-the-job experience and the allure of retirement activities. The discussion proceeds as follows. The first sec­tion presents evidence that a positive work experience is a critical component in decisions of workers ages 65 and over to remain in the labor force. The second section identifies job characteristics that either incline workers to retire or to remain on the job. The third section examines how personal objectives affect work/retirement decisions. The final section concludes that non-financial benefits seem far more important than non-financial costs – both in keeping some workers in the labor force and drawing others into retirement.