Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72 Page 73 Page 74 Page 75 Page 76 Page 77 Page 78 Page 79 Page 80 Page 81 Page 82 Page 83 Page 84 Page 85 Page 86 Page 87 Page 88 Page 89 Page 90 Page 91 Page 92 Page 93 Page 94 Page 95 Page 96 Page 97 Page 98 Page 99 Page 100 Page 101 Page 102 Page 103 Page 104 Page 105 Page 106 Page 107 Page 108CH APTER 2 51 who accepted an early retirement offer went to work for another employer. Gradual Retirement From the outset, the HRS has consistently shown that three out of every four older workers have said they would prefer to reduce hours gradu- ally rather than retire abruptly. Nevertheless, the most common retirement pattern is from full-time work to complete retirement. This pattern likely results from employers’ lack of flexibility about work hours (e.g., in accommodating older work- ers’ desire to work part-time). One study followed working HRS participants for 6 years (to the ages of 57 to 67) and found that, despite the prefer- ence for gradual retirement, only 13 percent called themselves “partially retired.” Approxi- mately 45 percent reported that they had fully retired, while 42 percent reported that they had not yet retired at all. Interestingly, 17 percent of older workers said they had actually increased their work effort at some point between 1992 and 1998, although it is not known whether the additional time at work reflects an increase in hours or a return to full-time or part-time work after retirement. Pension Plan Trends and Retirement The recent reversal of the trend toward early re- tirement is believed to be due, at least in part, to changes in retirement incentives within the Social Security program and to the elimination of man- datory retirement. Another factor may be changes in private pension plans. Over the past 20 years, defined-contribution plans such as 401(k) plans have become much more widespread. Unlike defined-benefit plans with fixed annual pension benefits, these plans do not have the built-in subsidies for early retirement. Two studies using HRS data to assess the ef- fect of the changing pension landscape have concluded that pension changes have indeed contributed to the reversal of the trend in early retirement. Friedberg and Webb (2003) argue that the spread of defined-contribution pension plans helps explain the increase in labor force participation among older workers, and further suggest that the median retirement age will continue to rise. A second study looked at retirement expectations for HRS participants who were working in 1992 (Munnell et al. 2003). The expected retirement age for workers with defined-benefit pension plans was 63.9 years, compared with 65.2 years for workers with defined-contribution plans. The study authors identified two aspects of defined-benefit coverage that are responsible for this difference: pension plan characteristics and pension plan wealth. The characteristics of defined-benefit plans (e.g., early retirement incentives, lifelong benefits, and reduced investment risk) were estimated to move up a person’s expected retirement date by about 8 months, and the amount of wealth in the plan moved up the expected retirement age by an additional 6 months, on average (Table 2-4). In contrast, the characteristics of defined- contribution plans were estimated to move back the expected retirement date by about 2 months, while the amount of wealth in the plan moved up the expected retirement date by about 1 month. The change in the types of pension plans adopted by employers may do more than influ- ence the timing of retirement, however. One study using HRS data found that people with defined-benefit plans are more likely to be “very satisfied” with retirement, compared with those without such plans (Panis 2003). Moreover, retirement satisfaction among people without defined-benefit pensions tends to sour during the course of retirement, while the satisfac- tion among defined-benefit plan pensioners TBL. 2-4 Expected retirement ages, by pension coverage characteristics (Persons who were working in 1992) No Pension Coverage Defined-Benefit Pension Coverage Defined-Contribution Pension Coverage Base Retirement Age 65.1 65.1 65.1 Effect of Pension Plan Characteristics -0.7 0.2 Effect of Pension Wealth -0.5 -0.1 Expected Retirement Age 65.1 63.9 65.2 Source: Munnell et al. 2003.