Are the sick or the rich retiring early?

A major challenge of the necessary reform of social security is to keep people from retiring early and in particular getting them to retire later. The big question here is what incentive will get them to voluntarily lengthen their working years. To do anything sensible here, one needs first to understand the retirement decision.

Jennifer Roberts, Nigel Rice and Andrew Jones notice that in Britain, early retirees are rich and in poor health. In Germany, early retirees are poor and also in poor health. This would mean that health is a major determinant in retirement decisions, not wealth or income. To establish this more firmly, the build a hazard model and confirm the result. This means: financial incentives to keep people from taking early retirements, and by extension to stay on longer, will not work if health outcomes do not improve.