PROJECT OVERVIEW

Gender Differences in Retirement Behavior
Jeannette Rogowski and Lynn Karoly

Given the large number of women now in the workforce, their retirement behavior is of increasing importance in forecasting the effects of the aging of the baby boom generation on public programs. Women's retirement behavior might be expected to differ from that of men, for two reasons: Available retirement resources differ (see the following abstract), and financial incentives may affect retirement decisions differently.

This paper focuses on the effects of retiree health insurance on the retirement behavior of older workers, contrasting findings for women and men. Using the HRS, Rogowski and Karoly estimate retirement models that include both full and partial retirements from the workforce. They find that retiree health insurance is an important determinant of retirement among older women workers. The probability of retirement for a full time female worker who has health insurance while working, but no retiree health benefit offer is 3 percentage points. In contrast, women who have retiree health benefit offers from their employers have an eight percentage point probability of retirement. Access to these benefits exclusively through a spouse's employer increases the probability of retirement by a somewhat smaller amount, six percentage points. Access to retiree health benefits through a spouse only is associated with an increased likelihood of partial retirement, however, through reductions in hours of work, compared to working full time.

Rogowski and Karoly find that women and men differ in terms of how they respond to the retirement incentives posed by employer-sponsored retiree health benefits. Compared to their male counter parts, women are more likely to retire compared to remaining working full time when retiree health benefits are available from their employers. For men, access to retiree health insurance from their own employer increases the probability of retirement by 4 percentage points compared to workers who have health insurance while working but would lose employer-sponsored health benefits after retirement. For women, the increase is 5 percentage points, a 20 percent difference in magnitude. This is consistent with the notion that women may be more risk averse than men. Thus, health insurance, which reduces the variability of health expenditures, has a larger effect on their retirement behavior. Further, men respond identically to the incentive effects of retiree health insurance, irrespective of source.

Behavioral differences between women and men are important to consider when estimating the effects of public policy on the labor force. For instance, policies that change access to post-retirement health insurance will affect women's retirement behavior in different ways than men. Failure to take this into consideration may result in inaccurate forecasts of the effects of such policy changes on the labor force behavior of older workers.