Pension Wealth and the Timing of Retirement

Exploiting early-career variation in firm-specific mandatory pension contribution rates, the authors study labor supply decisions from age 55 onward. Greater pension wealth accelerates labor market exit: at age 63, the elasticity is about 0.3—an additional 100,000 DKK (15,000 USD) at age 55 reduces earnings by 1% at age 63. Effects intensify near statutory retirement age, driven by self-support and early occupational pension withdrawals. Mandatory savings raise retirement wealth but induce earlier exit, underscoring key behavioral responses for pension policy design.