Magic retirement number is 66, but Medicare a key factor

New study finds employee and retiree health care coverage impacts length of working life

May 28, 2013 @ 3:00 pm

By Darla Mercado

Sixty-six is the magic retirement age for people seeking full Social Security eligibility, but Medicare eligibility appears to be a considerable factor for those who decide to stop working at 65.

That was the conclusion of a study published by the Center for Retirement Research at Boston College. The institute released a research brief Tuesday entitled “How Important is Medicare Eligibility in the Timing of Retirement?”

The study examined 3,717 individuals who were still employed at 64 and had observable work histories up to 66. Of those participants, 2,109 were eligible for full Social Security benefits at 65 and 1,608 had a higher full retirement age.

Researchers studied participants' behavior and examined a number of factors, including pension coverage, financial planning horizons and how health care coverage in retirement affects the likelihood of retirement.

CRR found that workers who didn't have retiree healthcare coverage were 6.5 percentage points more likely to retiree in the month they turn 65 than those with retiree health care coverage through their employer.

Ultimately, the study predicted that 13% of the participating workers who had employee health care coverage but no retiree coverage would retire at age 65, compared with 9.8% of those who had neither employee nor retiree health insurance. Meanwhile, 7.7% of those who had both retiree and employee coverage were likely to retire at age 65.

Author and research economist Matthew S. Rutledge noted that other factors contributed to why someone might decide to retire at 65 instead of waiting, but these factors were negligible. For instance, some defined-benefit pension plans consider 65 to be the retirement age while some people might not realize that the eligibility age for Social Security isn't 65 — it was raised to 66 in 2008.

However, he noted that more people might be able retire at 65 — or even earlier — depending on how effectively the Affordable Care Act is implemented. Next year, as part of President Barack Obama's health care reform act, states are expected to have health insurance exchange programs up and running.

“It depends on whether the exchanges will be able to replace or phase out employer-sponsored insurance,” Mr. Rutledge said. “If it's implemented well and the exchanges are good substitutes for what you can get through your employer, then you will see others retire a little earlier.”

“We think those people who are just holding on for the insurance coverage might leave their employer if they can find adequate coverage elsewhere,” he added.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

INTV

Children of AI, and when they are coming to financial advice

Technology reporter Ryan Neal talks about the tremendous progress in artificial intelligence in other industries, and how its applications are slowly making headway in the advice sector.

Latest news & opinion

SEC advice rule: Here's what you need to know

We sifted through the nearly 1,000-page proposal and picked out some of the most important points.

Cadaret Grant acquired by private-equity-backed Atria

75-year-old owner Arthur Grant positions the IBD for the 'next 33 years.'

SEC advice rule seeks to tighten reins on brokers

The proposed rule puts new restrictions on brokers, but it is still unclear how strongly the SEC is clamping down.

SEC advice rule hearing updates

Commission says a lot of work ahead, public will have 90 days to comment.

SEC advice proposal unveiling: Here's what to expect

Chairman Jay Clayton will initiate momentous action Wednesday, as the commission meets to debate a rule on broker and adviser standards.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print