Employers Use of Early Retirement Incentives, 1992-2000

This paper examines data from the Health and Retirement Study relating to the use of early retirement incentives by employers. Those early retirement offers tend to occur around age 59 and are found with varying frequencies in different occupations and professions. Cash bonuses were the most common type of early retirement incentive offered with enhanced pension benefits being the second most popular. Statistical examination of five waves of data spanning the period 1992-2000 reveals demographic and workplace factors that explain portions of the variance. Both age and salary exhibit nonlinear relationships, with the likelihood of an early retirement offer first increasing and then decreasing with both variables. Employer offers of special early retirement incentives peak at age 59 and at salaries between 60,000 and 100,000 respectively. Characteristics related to a greater likelihood of receiving an early retirement incentive are male gender, union membership, longer tenure with a firm, greater labor market experience, less reliance on physical labor in one s job, and participation in a defined benefit pension plan. However, a substantial proportion of the variation across industries and occupations remains unexplained.

Retirement Incentives/Early out Windows

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