In Behavioral Dimensions of Retirement Economics, edited by Henry Aaron, 81–115. ݎsG�ۜu��2��=��9WH��-��5�Ŭp�*��F�:�y*���m�r}��Cy\^��. Why?" Likewise, some individuals may start to receive benefits as soon as possible because they have been "forced" into retirement, either as a result of a layoff or a buyout offer from their employer. Armor, David A., and Shelley E. Taylor. "Framing Social Security Reform: Behavioral Responses to Changes in the Full Retirement Age." However, the Employee Benefit Research Institute (EBRI 2006) estimated that only about 15 percent of survey respondents reported retiring early because of health problems. Previous research has demonstrated that predictions of future happiness, referred to as affective forecasting (for example, Wilson and Gilbert (2003)), often lead individuals to imagine that the event in question would be better or worse (that is, more extreme) than it actually turns out to be. Kirby, Kris N., and Richard J. Herrnstein. It seems likely that, similar to what occurs with the traditional planning fallacy, individuals only envision the "best-case scenario" for retirement, where no major account-draining events take place (for example, an illness, a child's wedding, the need for long-term care, and so forth). Archives of Internal Medicine 151(2): 277–280. Personality and Social Psychology Review 5(4): 296–320. Psychological Science 17(12): 1054–1058. Previous research has focused on the interplay between wealth and retirement behavior (see for example, Gustman and Steinmeier (2002)), as these matters are inextricably linked. Rather than considering options absolutely, people tend to evaluate options relatively, that is, as gains or losses from a specified reference point. He's very excited and can't wait to be free. Get the unbiased info you need to find the right school. As a member, you'll also get unlimited access to over 83,000 Gilbert, Daniel T., Elizabeth C. Pinel, Timothy D. Wilson, Stephen J. Blumberg, and Thalia P. Wheatley. exacerbating problems even further. General mental health is more likely to be sustained after retirement if the person is married or retains close contact with friends and family members. Bidewell, John, Barbara Griffin, and Beryl Hesketh. Cambridge, MA: National Bureau of Economic Research. However, it should be noted that recent research exploring the use of narratives in medical decision making suggests that narratives sometimes may bias the decision process; that is, narratives may sway individuals to take one course of action over another, rather than simply provide individuals with more information to help them make better decisions (Winterbottom and others 2008). Specifically, the authors found that when the option to claim benefits at age 68 was framed as resulting in a monetary gain from an age-65 reference point, only 38 percent of survey respondents chose 68 as the preferred retirement age; on the other hand, 57 percent of respondents chose 68 as the preferred age when receiving benefits at age 65 was framed as resulting in a monetary loss from the age-68 reference point. Consistently, research shows that those who are forced or who retire abruptly _____. Continuing to engage in exercise and social activities is associated with better psychological and general health. Such a result would be an example of a framing effect (Tversky and Kahneman 1981), which occurs when a change in the surface features of a decision problem leads individuals to make different judgments and decisions. Munnell, Alicia H., Marric Buessing, Mauricio Soto, and Steven A. Sass. That is, retirees tend to be influenced by particular numbers (ages) associated with specific aspects of Social Security policy. 2000. "Social Security Literacy and Retirement Well-Being." 0000006596 00000 n Engaging in more social opportunities (e. Having the time to do things they couldn’t do when working, Retirement doesn’t resemble anything they thought it would, They feel unmoored and have no sense of purpose or, They are bored and don’t know what to do with all the free time they have now and thus feel idle and useless, They have to adapt to new stressors in their daily life (e.g., more occasions for arguments with a family member, performing chores they did not do when they were employed, loss of daily contact with “work friends”). Through experimentally manipulating the default retirement age to be 68 or 65, and framing retirement options as gains or losses from those different reference points, Fetherstonhaugh and Ross (1999) were able to demonstrate powerful framing effects. For many Americans, those two legs are far too weak or are altogether nonexistent. I presented research in the previous section that dealt with individuals' propensity to inaccurately predict their future happiness. An Issue in Brief No. However, recent decision-making research suggests that explaining the break-even age to prospective retirees may actually push them toward a preference for early benefit claiming. Tech and Engineering - Questions & Answers, Health and Medicine - Questions & Answers. 07-5757. credit-by-exam regardless of age or education level. Briefly, individuals can choose to begin receiving retirement benefits at any age between 62 (that is, the EEA) and 70, and this choice affects the size of the benefit. In Social Structures, Aging, and Self-Regulation in the Elderly, edited by K. Warner Schaie, and Laura Carstensen, 123–160. A 2008 report from EBRI (Helman and others 2008) shows that 22 percent of survey respondents indicated that they first began to think about the retirement decision a mere 6 months before they actually left their jobs. 2006. Written by: Thomas James . Services. Washington DC: Brookings Institution Press and Russell Sage Foundation. ———. Similarly, teachers who obtain or fail to obtain tenure report being equally as happy, even though both groups imagine that outcome will affect their happiness for years to come (Gilbert and others 1998). ———. 0000001504 00000 n "Social Security Decision Tool." 1997. Immune neglect becomes evident when friends are shocked to find that a recently divorced peer has started dating so quickly after the split. Football fans tend to not be as happy for as long as they would expect after their favorite team wins a big game, nor do they tend to be as unhappy for as long as they would expect following their team's loss. NIH Publication No. American Psychologist, 66, 170–179. "When Predictions Fail: The Dilemma of Unrealistic Optimism." Although there is no correct amount of time that individuals should ponder the retirement decision, research in JDM and behavioral economics suggests that the amount of time individuals spend contemplating when to retire may actually affect the decision itself. "The 2009 Retirement Confidence Survey: Economy Drives Confidence to Record Lows; Many Looking to Work Longer." Shoba Sreenivasan, Ph.D., and Linda E. Weinberger, Ph.D. Find a therapist for age-related concerns. He plans on building a bonfire and burning all his business suits because after this month, he plans to live in his golf attire. For example, Liebman and Luttmer (2009) found that presenting claiming information using a break-even frame led substantially more respondents to favor retiring at an earlier age than did alternative frames not emphasizing the break-even age. We all may want a full and meaningful life. Working Paper No. Stress is the sense of being under pressure that people often experience at work. "What, Me Worry? A 60-year-old worker may think it unwise to leave an unpleasant job, as there is no guarantee of finding another job, and therefore no guarantee of an income. One more prediction error may prove important in explaining potential retirees' myopic retirement decisions: the misprediction of future events. For example, Sasha spends three mornings a week volunteering at a local soup kitchen, and she's learning how to knit. 2004. For the entire Program Operations Manual System (POMS) description for explaining month of election options, see 42. Beehr, Terry A., Sharon Glazer, Norma L. Nielson, and Suzanne J. [EBRI] Employee Benefit Research Institute. Social Security Bulletin 70(4): 1–23. After a lifetime of work in the healthcare industry I find distinct meaning and purpose to finally having time to give to myself and my own needs. Furthermore, having the option to revoke one's decision (for example, to reverse the decision to continue working and instead retire at any point after reaching age 62), impedes the psychological immune system from restoring one's well-being. The Big Day: Smiles, Handshakes, and Farewells. Byram, Stephanie J. That is, individuals who continue to earn wages through working are less likely to claim benefits, regardless of their personal savings or pensions.7 Therefore, when encouraging individuals to delay claiming Social Security so that they receive a higher monthly benefit for the rest of their lives, it may behoove policymakers to shift their focus from delaying claiming to encouraging prolonged labor force participation.8 With this in mind, many of the issues raised later focus on behavioral and psychological impediments to working longer, and many of the suggested interventions focus on working longer and claiming later. The added benefit of a consent requirement could therefore help to combat individuals' tendency to want to avoid potentially important, but emotionally taxing, conversations about the aforementioned unexpected, negative events that could occur in retirement. "Work and Nonwork Predictors of Employees' Retirement Ages." To learn more, visit our Earning Credit Page. DOI: 10.1037/a0022411. the psychological impact of retirement for registered representative use only. The use of testimonials and narratives could be one way to combat affective forecasting errors as well. For example, there is, of course, a subgroup of retirement-age individuals who must leave the workforce at the EEA for health reasons.

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