Cultural Dimension of the Discrepancy of Planned Versus Actual Retirement Age in the U.S.: Hispanics Compared to Non-Hispanics

Background: The sustainability problems to the Social Security System has led to a glowing debate about what the full retirement age should be and if working longer is a plausible option for everyone or just for those who have at least some degree of control over their retirement decisions. All ethno-racial groups have increased their average retirement age over the last years. However, Hispanics’ retirement age is still lower even if they stated they plan to continue to work at late life.  Most studies about retirement timing have focused on middle-class Whites, and the prediction of planned or actual retirement separately. One of the lesser studied complexities of the retirement conundrum concerns ethno-racial differences and cultural-related predictors of retirement timing. Methodology: This study seeks to extend the understanding of differences between Hispanics and non-Hispanics regarding the timing of retirement relative to when they thought they would retire (0= never retire, 1=rtired earlier than planned, 2=retired when planned, 3=retired after than planned) by including a broad array of cultural and family related predictors, such as socioeconomic status at retirement, intergenerational transfers, spouse/partner marital status, number of dependents, hours taking care of grandchildren, health status, pension coverage and health insurance coverage. Data for this study was drawn from the Health and Retirement Study, a longitudinal study with biannual interviews since 1992, of a nationally representative sample of people aged 50+. A unique record of all non-institutionalized respondents, aged 50 or older, who self-reported being retired at 1994 (wave 2) or later, who were working and specified a planned retirement age or the intention to never retire at any wave before retirement, were selected. When the respondents stated a year of planned retirement age, the latest reported year of planned retirement age was used, if the respondents always stated they never intended to retire the latest answer was used. All Hispanics that met the sampling criteria were included in the study (n=699), while a random sample of non-Hispanics (n=699 out of over 7,000) was selected to have comparable samples. Multinomial regression models were used (retired when planned is used as the reference category). Results: The results indicate significant differences between Hispanics and non-Hispanic Whites. Taking care of grandchildren was a significant predictor among Hispanics but not among non-Hispanic Whites. For Hispanics taking care of grandchildren, for over 20 hrs., was associated with a decreased probability of stating they will never retire. Additionally, for both Hispanics and non-Hispanics, the increase of one dependent was associated with an increased on the probability of retiring earlier than planned. The effect of one additional dependent was larger for non-Hispanics. Conclusion and discussion: Hispanics’ migration experience marked by diminished labor market conditions along with their lack of education and English proficiency has imposed extra challenges to Hispanics merging into the U.S. mainstream, which has defined their retirement planning and decisions. For them, who have limited wealth accumulation non-monetary transfers play a stronger role when predicting retirement timing.