Partial Retirement as a Separate Mode of Retirement Behavior

Abstract

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.. University of Wisconsin Press andThe Board of Regents of the University of Wisconsin System are collaborating with JSTOR to digitize, preserve and extend access to The Journal of Human Resources. ABSTRACT Partial retirement is a quantitatively important retirement state that shows significant structural differences from behavioral functions of either full retirement or full-time work. Alternative models of the choice of retirement state are estimated on a sample of white married males from the Retirement History Survey, 1967-1973. Findings suggest that, while partial retirement appears to take several different forms, the critical choice for a large number of older workers appears to be that of labor force participation first, with either partial or full-time employment determined conditionally among participants. The model has good explanatory power and conforms to expectations of the effects of various relevant variables on labor supply decisions.It has become increasingly clear that the retirement process is far more complex than suggested by the simple dichotomy between full-time employment and full retirement. Significant numbers of older workers spend considerable amounts of time in the intermediate state of partial retirement, a single term covering a variety of retirement forms. Partial retirement may occur in the main lifetime job with adjustments in the work contract allowing for reduced hours or responsibilities. More often it involves a change ofjob and frequently a transition into self-employment. These changes may be related to acceptance of pension benefits or to

Gradual Retirement: Preferences and Limitations

“…Steinmeier (1984b, 2000) defined gradual retirement as a more than 40% decline in both hours worked and earnings. In data from the early seventies, the peaks in the relative earnings -the ratio of current earnings to maximum earnings -distributions by age and year suggest an alternative threshold of 50% (Honig and Hanoch 1985).…”

“…Examples include downsized work schedules, temporary assignments, consulting work, telecommuting, leave of absence and job-sharing (Reday-Mulvey 1995;Flahaven 2002;Chen and Scott 2003). Partial retirement, on the other hand, involves a change of employer or a shift into self-employment, accompanied by a reduction in working hours or the wage rate (or both) (Gustman and Steinmeier 1983, 1984bHonig and Hanoch 1985;Scott 2004).…”

“…The percentage of the pension that is received is usually the same as the reduction in working hours (an individual reducing work hours by 30% would thus receive 30% of the pension benefits in phased retirement) (Latulippe and Turner 2000;Brown 2005). This measure is less useful in the US and several other countries, however, where gradual retirees usually do not have pension coverage (Ruhm 1990;Honig and Hanoch 1985).…”

“…A problem with stated gradual retirement can be its inconsistency with objective measurements. For example, respondents report that they are in gradual retirement but have observed earnings at or near previous levels or have not held a job for a substantial amount of time before the survey (Honig and Hanoch 1985;Gustman and Steinmeier 1986). Quinn (1981) compared the subjective account of partial retirement to objective measures, such as labour force status and annual hours worked and concludes that the self-evaluation is generally consistent with the quantitative indicators (see also Gustman and Steinmeier 1984b), but the opposite has also been argued (Murray 1979;Ruhm 1991).…”

“…Gustman and Steinmeier (1984b), Honig and Hanoch (1985) and Sueyoshi (1989) used RHS data for this analysis. Here, we focus on three studies that have used the more recent data from the HRS.…”