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How is Economic Hardship Avoided by Those Retiring Before the Social Security Entitlement Age?

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  • 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.

Suggested Citation

  • Kevin S. Milligan, 2012. "How is Economic Hardship Avoided by Those Retiring Before the Social Security Entitlement Age?," NBER Working Papers 18051, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:18051
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    1. Frank T. Denton & Byron G. Spencer, 2008. "What is Retirement? A Review and Assessment of Alternative Concepts and Measures," Social and Economic Dimensions of an Aging Population Research Papers 231, McMaster University.
    2. Kevin Milligan, 2008. "The Evolution of Elderly Poverty in Canada," Canadian Public Policy, University of Toronto Press, vol. 34(s1), pages 79-94, November.
    3. Jeff Borland, 2005. "Transitions to Retirement: A Review," Melbourne Institute Working Paper Series wp2005n03, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    4. Michael Baker & Jonathan Gruber & Kevin S. Milligan, 2009. "Retirement Income Security and Well-Being in Canada," NBER Working Papers 14667, National Bureau of Economic Research, Inc.
    5. Richard W. Johnson & Gordon B.T. Mermin, 2009. "Financial Hardship Before and After Social Security's Early Eligibility Age," Working Papers, Center for Retirement Research at Boston College wp2009-8, Center for Retirement Research, revised Mar 2009.
    6. Gary V. Engelhardt & Jonathan Gruber, 2004. "Social Security and the Evolution of Elderly Poverty," NBER Working Papers 10466, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Giorgio Brunello & Monica Langella, 2013. "Bridge jobs in Europe," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-18, December.

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    More about this item

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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