Does Social Security Affect Women's Retirement Decisions?

This paper estimates a model of the retirement decision of women using data from the RAND version of the Health and Retirement Study (HRS). In light of the changing nature of women's labor force participation, earnings, and marital status over the past few decades, a greater proportion of women face retirement decisions than in the past. Furthermore, due to the rise in women's earnings, they are eligible to receive larger Social Security benefits. This paper tests the hypothesis that Social Security plays a non-trivial role in women's retirement decisions. The results indicate that eligibility to receive Social Security benefits significantly affects women's retirement decisions. The findings also suggest that the level of Social Security benefits significantly impacts women's retirement decisions. However, the negative coefficient on Social Security benefits is likely driven by the link between earnings and benefits. The relationship between Social Security eligibility and a women's probability of retirement suggests that an increase in the early retirement age will cause women to remain in the labor force longer and will delay their collection of Social Security benefits. Further analysis providing greater distinction between earnings and Social Security benefits is needed before policy implications can be drawn regarding the effect of Social Security benefit levels on women's retirement decisions.