Determinants of Preferred Retirement Age in an Aging Society

Abstract

Theoretical background: The process of aging has profound economic consequences for many countries, as it increases the number of beneficiaries of the pension system and extends the period of receiving pension benefits. We claim that understanding individual preferences concerning the retirement age is one of the key factors of successful reforms of pension systems and a prerequisite to convince a greater number of individuals to retire later. Purpose of the article: The aim of the article is to determine factors influencing the decision on the moment of retirement. The analysis takes into account socio-economic characteristics of individuals (including gender, age, education, health and income), as well as individual expectations and relative deprivation. The second goal is to compare preferences of men and women concerning the retirement age. Research methods:The empirical part of the article exploits a dataset based on primary research conducted in Poland which is one of the fastest aging countries in Europe (data for N = 448 respondents were collected with the help of an online questionnaire from April to May 2021). Both purposes are achieved with the help of econometric methods (OLS, quantile, and logit regressions). Main findings: We show that individuals have heterogeneous preferences concerning the retirement age, but on average they are willing to retire later than others (and often later than the official retirement age). We argue that one of the driving forces behind this phenomenon is associated with aversion towards relative deprivation. We demonstrate that individual preferences concerning the retirement age are not directly dependent on the current situation of respondents (depicted, e.g. by their education, health, place of living or income), but are determined by their expectations concerning their material situation when retired and by preferences regarding others. We also discuss some differences between men and women with regard to the preferred retirement age (e.g. women are more frequently ready to retire later than the official retirement age compared to men, but in general propose lower retirement age than men for both genders).Pobrane z czasopisma Annales H -Oeconomia http://oeconomia.annales.umcs.pl Data