What Role Do Financial and Health Constraints Play in Partial Retirement

Abstract

Although partial retirement usually refers to workers voluntarily transitioning from full-time work to complete retirement, health or financial problems may be causing these changes. Using data from the Health and Retirement Study, I find that partial retirees are less healthy than similar full-time workers and report that their health constrains their ability to work. In addition, over 26 percent of partial retirees return to work after retirement. The decline in hourly wages for partial retirees who were previously retired is substantially worse than it is for partial retirees who transitioned directly from full-time work. Regression analysis indicates that divorced women and older workers with defined contribution pension plans have an increased probability of returning to work or postponing retirement.