and consumption patterns, while Hurd surveys some of the institutional causes that lead individuals to retire at different ages, such as fixed employment costs, the Social Security earnings test, and pre-existing condition clauses in health insurance. In addition, the perceived financial condition of the employer may play a role in an individual's decision to leave a firm.

This paper examines the determinants of some of the key labor supply decisions and their relationship to retirement behavior and retirement income. In order to determine which policies will have the most desirable effects at the lowest cost, we need to assess the relationships and interactions among direct and indirect influences. Some of the questions that have been debated are the following: Will increasing the Social Security early and normal retirement ages create a substitution toward increased disability applications? Have increasing life expectancies resulted in more productive years of life or just prolonged years of nonwork life? Is the relationship between longevity and the ability to work becoming weaker as labor-intensive jobs are a smaller proportion of available jobs? How do individuals formulate expectations about the future and how do they incorporate uncertainty into their decisions? What would be the impact of universal health coverage on labor force participation?

This paper will investigate the data and research methodology needed to answer questions such as these. The first section summarizes some of the trends in factors affecting labor force participation decisions and retirement income. The ability to predict future trends is critical to forecasting the success of proposed changes in policy aimed at ensuring adequate retirement income. The next five sections focus on specific key areas that potentially affect the labor supply decision, the transition to retirement, and associated retirement income: Social Security, pensions and early retirement "window" plans, disability, Medicare and other forms of health insurance, and job characteristics. Each of these sections begins with a summary of questions and currently available techniques for addressing them. I then identify future research priorities, focusing on data and methods necessary to understand the extent of the interaction among these areas and how policies aimed at specific areas will ultimately affect retirement behavior and income. I present conclusions in the final section.

SUMMARY OF TRENDS

While legislation over the last few decades has aimed to reduce the incidence of poverty among the elderly, the threat of poverty has not been eradicated, as shown in Figure 3-1. As individuals age, the probability of being at or near the poverty line increases substantially. One group of elderly particularly at risk are the nearly one-third of Americans over age 65 that live alone, most often women:

For the millions of elderly people who live alone, the threats of impoverishment, loss of independence, loneliness and isolation are very real. Many have serious health and economic problems that our society and our governments are



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