Partial Retirement as A Separate Mode of Retirement Revisited

Older Americans tend to live longer and are healthier compared with prior cohorts. Recent research document that retirement trends of the elderly in the United States have changed dramatically from one-step traditional retirement pattern to a smoother one. We study how the personal, household, and financial characteristics impact on partial retirement patterns of older Americans between age 50 and 75. We find that respondents with high household income or respondents who have pension or annuity income tend to retire gradually with the use of part-time work. Moreover, respondents at good financial conditions are unwilling to stay longer in part-time work, but respondents with high household income are exceptions. To further analyze financial characteristics, we include four eligibility age indicators to investigate impacts of eligibility retirement ages for social security benefits. We find that when respondents are between normal retirement age and age 70, they are less likely to make transitions from part-time work to full retirement. In addition, when respondents are between normal retirement age and age 70, they would not stay longer in part-time work. In particular, we use multinomial probit model to examine determinants on retirement decisions, especially on part-time work. One advantage of using multinomial probit model is to avoid IIA (Independence of Irrelevant Alternatives) assumption.