Retirement Decisions: Federal Policies Offer Mixed Signals about When to Retire

Question: We need to understand the (interacting and sometimes contradictory) incentives in Social Security, Medicare, and pension laws and how workers respond to them in order to address the demographic challenges facing the nation. Finding: Using the NIA-funded Health and Retirement Study, GAO found that Federal policies offer mixed incentives. The availability of social security at age 62 provides an incentive to retire early, while the increase in the full retirement age and elimination of the earnings test encourages continued work. Medicare provides a strong incentive for those without health insurance to stay working until age 65 but this also is an encouragement to retire earlier than the full retirement age. Tax policy also encourages earlier retirement. In addition, workers retirement depends strongly on retiree health insurance and pension plan availability. Recommendation: Consider changes to law, programs, and policies that support retirement security and provide incentives to encourage work at older ages.

retirement planning/Public Policy/pension Plans/Medicare/tax Policy

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