Finance

German

Archaeology

Retirement age

History

Macroeconomics

Labour economics

Political science

Statutory law

Economics

Microeconomics

Incentive

Stylized fact

Pension

American Economic Review

This paper studies the large concentration of retirement behavior around statutory retirement ages, a puzzling stylized fact. To investigate this fact, I estimate bunching responses to 644 pension benefit discontinuities, using administrative data on the universe of German retirees. Financial incentives alone cannot explain retirement patterns, but there is a large direct effect of statutory retirement ages. I argue that the framing of statutory ages as reference points for retirement provides a plausible explanation. Simulations based on a model with reference dependence highlight that shifting statutory ages via pension reforms is an effective policy to influence retirement behavior. (JEL D91, H55, J26, J32)

Reference Points for Retirement Behavior: Evidence from German Pension Discontinuities