Non-financial determinants of the individual retirement age

It is difficult to make predictions about individual retirement behavior after a policy change. How will a higher ‘standard pension age’ affect individual retirement behavior? The effect of financial incentives on retirement behavior is well-studied in the economic literature, and it is by now possible to produce a reasonable prediction of the direct financial effect on retirement. It is however known that individual retirement decisions cannot be fully explained from financial stimuli (Lumsdaine, Stock, and Wise 1996; Mastrobuoni 2009). It can be loosely stated that about half of the observed retirement behavior is related to financial incentives, while the other half is not.

This research will provide important insights on the retirement behavior of individuals. What will be the impact of a higher pension age on the labor force participation rate? The research will thereby distinguish between different groups in society. It is e.g. likely that financial illiteracy is more important for lower educated individuals. This has consequences for the optimal design of the pension overview. How should the pensions be presented to individuals? The results of this research are directly relevant for answering this normative research question.