The Retirement and Social Security Benefit Claiming of U.S. Military Retirees

David Knapp, Beth Asch, Jim Hosek and Michael G. Mattock
Additional contact information
David Knapp: RAND
Beth Asch: RAND
Jim Hosek: RAND
Michael G. Mattock: RAND

Working Papers from University of Michigan, Michigan Retirement Research Center

Abstract: After serving 20 years in the active component of the U.S. military, service members can retire from the military, as young as age 38, and begin collecting a monthly pension benefit for the remainder of their life. In this paper, we ask: do active duty military retirees exit the labor force earlier or later because of their access to military retirement benefits? Do they alter their Social Security claiming decisions? We theorize that access to a consistent source of income may encourage earlier retirement through a standard income effect, but the military pension may also increase a retiree’s post-military job search, allowing for a greater wage and improved job satisfaction due to a better employer-employee match. Access to a steady source of pension income may also reduce short-term liquidity constraints, encouraging military retirees to delay claiming their Social Security benefit in order to benefit from delayed retirement. We estimate the impact of military retiree pension income on retirement empirically using the 1992 Health and Retirement Study cohort. We identify the military pension effect in a difference-in-difference model by exploiting a surprise change in military-retiree benefits in 2001 that extended Tricare health benefits to Medicare eligible military retirees and their spouses through the end of their lives. TFL eliminated the need to purchase Medigap coverage, thereby eliminating a cost that could cut into disposable income from their military annuity. A key limitation of the analysis is that the HRS includes relatively few military retirees.

Pages: 45 pages
Date: 2016-02
New Economics Papers: this item is included in nep-age
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://mrdrc.isr.umich.edu/publications/Papers/pdf/wp336.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden (http://mrdrc.isr.umich.edu/publications/Papers/pdf/wp336.pdf [301 Moved Permanently]--> https://mrdrc.isr.umich.edu/publications/Papers/pdf/wp336.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mrr:papers:wp336

Access Statistics for this paper

More papers in Working Papers from University of Michigan, Michigan Retirement Research Center P.O. Box 1248, Ann Arbor, MI 48104. Contact information at EDIRC.
Bibliographic data for series maintained by MRRC Administrator ().