Involuntary Retirements: Prevalence, Causes, and Impacts

This paper examines the prevalence, causes, and impacts of involuntary retirement using data from the Health and Retirement Study (HRS), wherein 30 percent of retirees experience involuntary retirement. We find that factors motivating voluntary retirement (aging, pensions, Social Security, savings, and preferences) are much weaker determinants of involuntary retirement, whereas poor health and job loss are very significant determinants for this group. Our results indicate that involuntary retirees are at much greater risk of falling into poverty and account for the great majority of reports of retirement dissatisfaction. We suggest policymakers consider social insurance reform with the fundamental differences between voluntary and involuntary retirement in mind.