Retirement Decisions: Federal Policies Offer Mixed Signals about When to Retire

GAO-07-753 Published: Jul 11, 2007. Publicly Released: Jul 11, 2007.
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While many factors influence workers' decisions to retire, Social Security, Medicare, and pension laws also play a role, offering incentives to retire earlier and later. Identifying these incentives and how workers respond can help policy makers address the demographic challenges facing the nation. GAO assessed (1) the incentives federal policies provide about when to retire, (2) recent retirement patterns and whether there is evidence that changes in Social Security requirements have resulted in later retirements, and (3) whether tax-favored private retiree health insurance and pension benefits influence when people retire. GAO analyzed retirement age laws and SSA data and conducted statistical analysis of Health and Retirement Study data. Under the Comptroller General's authority, GAO has prepared this report on its own initiative.

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Matter for Congressional Consideration

Matter Status Comments
Accordingly, in light of the range of challenges facing the country in the 21st century, Congress may wish to consider changes to laws, programs, and policies that support retirement security, including retirement ages, in order to provide a set of signals that work in tandem to encourage work at older ages.
Closed – Implemented
The Congress has referred to committee several bills to encourage work at older ages. Two bills were introduced in the 111th Congress that called for an acceleration of Social Security Administration's age 67 full retirement age (HR 4529 and S 429). HR 4529, for example, would further increase the full retirement age based on changes in life expectancies. In the 112th Congress, the Social Security Solvency and Sustainability Act (S 804) would increase the normal retirement age by specified graduated stages to age 70, revise the formula for the maximum age for delayed retirement credit, and design a formula for progressive indexing of an individual's primary insurance amount.

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