Early Retirement - Research and Statistics

Introduction
The concepts that are a part of the working world and how one enters into retirement is one that is also continuously altering and developing. As economics turn, as well as potentials and possibilities for individuals, are also different variables that factor into retiring among the elderly, as well as those who are reaching the correct age for retirement. This paper will examine what factors contribute to early retirement. This will include the demographics of individuals who have the potential of retiring early, the ages that factor in, as well as what occurs after retirement. One of the major problems that is hindering among those who retire is in relation to not being able to have enough financial support to stay retired. There will also be an examination of the gaps that occur with retirement and the inability to stay outside of the working world. The data that was retrieved in order to examine the concepts of early retirement was found from the Office of Personnel Management, which is administered by the federal government. All data that was used pertaining to these files were considered in relation to the most important factors, as well as the most recent information. The results that were received all show how the concept of early retirement is one that is affecting society and the cultural means in which individuals are able to live with. The question that will be asked from this data is related to what the average age for early retirement is, as well as what demographic factors apply to this. Beyond this, there will be information retrieved in relation to how many individuals stay retired and how the expectations after retirement, such as moving back into the workforce, continue to change.

Literature Review

The concept of early retirement and the considerations that were made in relation to what early retirement means were first found in relation to other relevant information. According to the Pew Research Center, there are a large amount of gaps that occur with those that retire. According to recent surveys within this center, 77% of individuals who retire are still required to work for pay, even after they retire. However, it is also noted through this survey that only 12% of those who are retired are working for pay, while another 27% have worked for pay in the past after retirement, but are not anymore. According to this same survey, early retirement is expected to begin at the age of 61. However, the actual age that is more relevant to retiring early is at 57.8. The relevance of this survey shows that the actual age of retirement for most individuals, as compared to the expectations for what retirement means has a large gap that is not being considered and which individuals are not being educated about. "Among the 77% of the currently employed (and not retired) public who says they expect to do some kind of work for pay after they retire, there is no significant differences by age, gender, income, race, ethnicity, education or origin. In short, this has now become a widely held expectation among virtually all kinds of people.... The expectations that today's workers have about working after retirement are sharply different from the actual experiences of today's retirees" (Pew Research, 2006). This shows that the gap between those who are considering retiring, and the events that occur to move them back into the work force, as well as the demographics that are considered, all vary and show gaps, no matter what the field of interest or the background of the individual. With this specific analysis on early retirement are others who are stating the concepts for financial independence and the trends that are pushing individuals into the concept of early retirement, working after retirement and

the ages in which the shift in work is occurring. Some are saying that the retirement shift is partially because of the Social Security program going unchanged for the past 63 years, showing that the benefits that are received after one stops working is not congruent to what is needed in order to retire. It is also being predicted that the retirement age and early retirement will continue to stay close to the same age, or will possibly raise, because the benefits will increase and because of financial situations. This is related to the question of whether the retirement age should be increased as adults are living longer because of the health benefits and potentials that are available. The result is that those who are retiring early, also have to consider the types of benefits, the concept of unemployment and the changes that occur in individuals lives because of the development of better health structures and the financial developments that continuously change within the economy (Korczyk, 2004). Both of these literature reviews show that there are sharp contrasts and controversies in defining the retirement age, what early retirement should mean and what the trends are within work areas in helping individuals to move towards retirement. The cultural, economic and social trends will be analyzed in creating an understanding of what early retirement now means to individuals and how it is currently working within the working environment.

Descriptive Statistics
In defining early retirement, several affiliations with individuals who were considering retiring were retrieved. Specifically, the statistics that were involved with the understanding of early retirement began with the total number of individuals who were retired. This was then divided by age and years in which the individuals served. The intent behind retirement was then analyzed. Specifically, this included individuals who voluntarily retried, did so because of disability or because it was mandatory. Individuals who retired for unknown reasons were also considered. The demographics, including gender and ethnicity was also considered. Last, was the payment plans in which

individuals were retiring under, which shows an understanding of how many individuals needed a payment plan, what type they were eligible for and what type of position was held when they reached retirement. The conclusions on these demographics can be seen in Graph 1.

Graph 1: Variables for Early Retirement

Variable | Obs Mean Std. Dev. Min Max -------------+-------------------------------------------------------total | 521239 age | 58 years | 26.3 -------------+-------------------------------------------------------voluntary| 339300 430269.5 339300 .05 2 age | 60.9 59.45 61 .05 2 years | 27.5 26.9 28 .05 2 -------------+-------------------------------------------------------disability| 56075 288657 56075 .05 2 age | 50.1 54.05 50 .05 2 years | 17.4 21.85 17 .05 2 -------------+-------------------------------------------------------mandatory | 3780 262509.5 3780 .05 2 age | 58.2 58.1 58 .05 2 years | 28.2 27.25 28 .05 2 -------------+-------------------------------------------------------other | 122084 321661.5 122084 .05 2 age | 53.5 55.75 54 .05 2 years| 27.0 26.65 27 .05 2 -------------+-------------------------------------------------------male | 325674 423456.5 325674 .05 2 female | 195565 358402 195565 .05 2 Asian | 14781 268010 14781 .05 2 black | 75336 298287.5 75336 .05 2

Hispanic | 31200 276219.5 5019 .05 2 Native Am. | 5019 263129 394617 .05 2 white | 394617 457928 368873 .05 2 -------------+-------------------------------------------------------pay plans | 368873 445056 368873 .05 2 grades 1-4 | 17842 269540.5 17842 .05 2 grades 5-8| 99516 310377.5 99516 .05 2 grades 9-12 | 154247 33774.3 154427 .05 2 grades 13-15| 97126 309182.5 997126 .05 2 wage pay| 90632 305935.5 90632 .05 2 executive pa | 5208 263223.5 5208 .05 2 other pay | 56526 288882.5 56526 .05 2 sup/man| 91065 306152 91065 .05 2 non-supervis | 426613 473926 473920 .05 2 The average retirement age for those who are getting out of the work force earlier is at 58 years. This is met with an average of individuals working for 26.3 years. This was a test range of 521,239 individuals. This was shown by the top total numbers in which the other numbers were related to, as the dummy numbers. When these were placed in to see the averages, it was found that 339,300 individuals retired voluntarily at an average age of 59.5, which is at 65%, 56,075 individuals retired because of disability, at an average age of 54.1, consisting of 11% of those who retire early, 3780 individuals retired because it was mandatory at the age of 58.2 at 1% and 122,084 individuals retired for other reasons at the age of 53.5 for a percentage of 23%. Within these, were averages that ranged with the working years, moving to an average range of 20 years with the high point at 27 years. The results also show a significant difference based on ethnicity. The average number of males that retire is 325,674, while the average number of females that retire early is 195,565. This shows that 62% of those that retire are males, and 38% are females, a significant gender gap for those who retire at an early

age. In relation to this, the ethnic differences show that whites that retire early are at 394,617, while other ethnicities are at a significantly lower percentage. The percentage of whites that retire early is at almost 38%, with the margins of minorities not ranging any higher than 17%, such as seen in the blacks. The payment plans that are considered for those that retire only are acquired by 71% of those retire, with 368,873 out of 521,290 individuals moving into payment plans. The largest percentage of this is those who are on the Grade 9-12 plan, which consists of 29.5% of the individuals. The lower payment plan that is used is Grade 1-4, which is only 3.4% of those who retire. The second lowest is grade 5-8, which is an average of 19% and grades 13-15 is also at a percentage of 19%. Wage pay consists of 17% of those who retire, executive pay is at 1% , supervisor and manager pay is at 17% and non supervisor pay is at 82%.

Interpretation of the Variables

The data that was acquired shows that there are gaps between the various variables that cause for differences in early retirement as well as the need to re-form the agenda of retirement. The amount of individuals that retire at the age of 58 to 60 are divided into different categories, all which show the differences in intent and ideal for retirement. The first important consideration to make is the motivation behind retiring. 65% of those who retire say that it is voluntary, while 11% retire because of disability, 1% retire because it is mandatory and 23% retire for unknown reasons. This shows that the majority of individuals are retiring because they want to and because they have a choice. However, the age range with those that retire early is different, dependent on these factors. For those that retire early because of voluntary reasons, they are likely to retire 2 years later than others and have worked an average of 7 years longer than others. Those who retire because it is mandatory or because they are disabled have a significantly lower age, at 50-53 and have worked an average of 20 years,

instead of 27. This shows that early retirement for mandatory intent is a more probable reason to retire before time. Those who are doing so because it is voluntary usually do so because they have worked longer and are a few years older in age. This is significant in showing the factors behind early retirement as well as showing the gap between those who want to retire early and those who do not want to retire early but are forced to. The second important factor to take into consideration is the gender and ethnic specifications within each area. Based on demographics, there are 62% of men and 38% of women who are retiring each year. The difference between these could vary for various reasons. However, it can be assumed that those who are more likely to voluntarily retire will be males. This shows a second gap in the intent and ability to retire at an early age. Various intents and purpose may factor into this gap; however, this is a significant difference to note in terms of demographics. This same concept can be applied for the ethnicities, as 38% of those who retire are whites, 17% are black, and the rest of the percentages is divided almost evenly among other racial groups. Without significant understanding of intent or the number of individuals in the work force who are of different ethnicities, it is impossible to reach conclusions on the intent behind early retirement among different racial groups. However, it can be noted that there is a gap in the presentation of ethnic groups and the possibility for early retirement. The third contributing factor to the statistics is the payment plans. The payment plans and early retirement are important, as it allows one to decide whether they will be able to retire at an early age. It was noted that most individuals are in the grade 9-12 plan when they retire, which allows them to have more flow of income with this plan. The other plans, specifically the grades 5-8 and 13-15 were both at a percentage of 19%. This shows that these specific grades and payment plans that are taken into account allow for more individuals to retire. Those who have the payment plan of grade 9-12 will be able to retire early and benefit more from the contributions of the plan. In

relation to this, most that retire are receiving non-supervisor pay. This shows a consistent demographic in that those that retire do not necessarily have to have a specific ranking in order to feel secure in retiring, but instead need to have an appropriate payment plan that helps them to reach their goals. Wage pay and supervisor and manager pay were both at 19%, also showing that there is some significance in this type of pay and those who are ready to retire early. It can be assumed that one of the main factors in reasoning behind why one retires can be attributed to the type of payment plan in which one is receiving and how this affects their retirement.

Discrete and Continuous Regression

While early retirement can be seen as one that shows significant differences in motives as well as demographics, one can also see that this varies according to the variables that are available. A regression analysis was done while questioning how the totals of the retirement age were compared to the independent variables of each of the percentages taken from the concept of retirement. In doing so, this allowed to see what percentage and variables of the overall total were a part of the actual totals from the overall retirement age. R^2 = 0.44784834611 Source SS df MS F P ------------------------ ------------- -------- --------- --------- --------Regression 291981188921 2 1.4599e11 9.7331596 .0008 *** x^1 139900950996 1 1.399e11 9.3271644 .0055 ** x^2 152080237925 1 1.5208e11 10.139155 .0040 ** Error 359983234884 24 1.4999e10 ------------------------ ------------- -------- --------- --------- --------Total 651964423805 26 Table of Statistics for the Regression Coefficients:

Column Coef. Std Error t(Coef=0) P +/-95% CL ------------------------ --------- --------- --------- --------- --------Intercept 0 31101.389 3.9527487 .0006 *** 64190.112 x^1 0 0.291682 4.1139393 .0004 *** 0.602002 x^2 0 3.2484e-7 -3.184204 .0040 ** 6.7044e-7 Degrees of freedom for two-tailed t tests = 24 If P<=0.05, the coefficient is significantly different from 0. Variable | X Y Observed Y Expected Residual -------------+-------------------------------------------------------total | 521239 age | 58 years | 26.3 -------------+-------------------------------------------------------voluntary| 339300 430269.5 41103.018 .5819 age | 60.9 59.45 123009 .59822 years | 27.5 26.9 122968 .07255 -------------+-------------------------------------------------------disability| 56075 288657 186971 .604382 age | 50.1 54.05 122996 .03988 years | 17.4 21.85 122956 .0034 -------------+-------------------------------------------------------mandatory | 3780 262509.5 127457 .948865 age | 58.2 58.1 123005 .70866 years | 28.2 27.25 122969 .56248 -------------+-------------------------------------------------------other | 122084 321661.5 254015 .9786793 age | 53.5 55.75 123000 .41938 years| 27.0 26.65 122968 .7226 -------------+-------------------------------------------------------male | 325674 423456.5 404024 .9038845

female | 195565 358402 318046 .2187428 Asian | 14781 268010 140446 .37298 black | 75336 298287.5 207465 .210967 Hispanic | 31200 276219.5 435388 .3205 Native Am. | 5019 263129 424827 .8791744 white | 394617 457928 144016 .579564 -------------+-------------------------------------------------------pay plans | 368873 445056 232107 .8195489 grades 1-4 | 17842 269540.5 283416 .59371 grades 5-8| 99516 310377.5 291027 .2172538 grades 9-12 | 154247 33774.3 223194 .9648946 grades 13-15| 97126 309182.5 129157 .179088 wage pay| 90632 305935.5 187460 .449452 executive pa | 5208 263223.5 129147 .179088 other pay | 56526 288882.5 187460 .449452 sup/man| 91065 306152 223632 .449452 non-supervis | 426613 473926 223641 .2593588 The regression that is seen within these values is at 0.44784834611. This shows that there is a significant difference in the early retirement age that is perceived as compared to the age and number of individuals that retire at an early age, especially differing in the ethnic groups, gender differences and with the age and years that are available within each category. With the overall value being at an average of 5% difference from those who are seen retiring early and those who do not move into the specific values and numbers added are also values that differ within each of the categories. The regression that is seen shows that the 5% difference between the overall totals and the ethnic groups also proves that there is a potential difference in ages, years that are worked and the ethnic factors, as well as the motivations behind retiring. The overall values that are factored into the concept of retirement is one that differs with the individual variables that are calculated

within the formulas that are used. This shows that the retirement age, and the concepts that link to early retirement do not factor in other considerations and are somewhat limited in defining how they add to the total values of early retirement.

Conclusion
From the past concepts that were shown in relation to early retirement, as well as the statistics that were added in this particular study, it can be seen that the motives behind retiring, as well as the circumstances and demographics that are a part of retirement can lead to a variety of conclusions about why one retires early and what the averages in relation to years worked and age are. According to the Pew Research, the number of individuals who retired had no significant difference in demographic considerations for why they retired. This included age, ethnicity, gender and motives for retiring. However, it can be seen that, in relation to the overall values and abilities to retire, there are specific considerations and concepts that link to this. For example, the age factors in, especially if the retirement is one that is mandatory or from a disability. This will cause for an earlier retirement than for those who do this voluntarily. For those that do have voluntary retirement, the age factors in as being slightly older. This can be seen through the percentages of those who retire early on a volunteer basis, as well as the average ages noted in each of the statistical values. This also related to ethnic values and the gender relations in terms of retirement. According to the statistical values, it can be seen that the number of individuals who retire each year according to these demographics can not be determined. From looking at the statistical averages, it was noted that there was a significant percentage difference, as well as regression in relation to the gender and ethnic numbers. However, other factors, such as number of individuals working in an area that are at the correct age to retire, and the ethnicity and gender that is linked to this has to be considered. Therefore,

there is no conclusion that can be reached in terms of the gender or ethnicity that one is and it's relation to retiring. The most important consideration in terms of early retirement is related to the financial stability that one has after they retire. It could be seen that there was a significant difference in the number of individuals who retired, dependent on the payment plans that were available. This was seen in the percentages of individuals who had specific plans and how likely they were to retire at a specific age. This shows that the financial considerations for when one retires is one of the most important factors to consider when one decides to take an early retirement. This is not dependent on the job in which one has or the hierarchial structure in which they are under with their organization, but is dependent on the compensation plan that they will receive after they retire. The conclusion that is reached shows that early retirement is one that is dependent on situation as well as motive in determining when one will be able to retire as well as how the age and number of year worked determines the situations and outcome. References: 1. Pew Research Center Publications. (2006). Working After Retirement: The Gap Between Expectations and Reality. Pew Research Center: Washington D.C.: Retrieved from: http://pewresearch.org/pubs/320/working-afterretirement-the-gap-between-expectations-and-reality. 2. Korczyk, Sophie. (2004). In Brief: Is Early Retirement Ending? AARP: Washington DC.