Competing Demands: Financially Dependent Children and Parental Retirement
Kahn, Joan R
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The 1960s through the 1980s saw an expansion of generous pensions allowing workers to retire at younger ages. Since then, pensions have become less generous, and more people are working longer. Although previous research has often focused on financial and pension-related explanations for the postponement of retirement, little research has focused on how family demands shape retirement decisions. Changes in family formation in the second half of the 20th Century include delayed marriage, delayed childbearing, divorce, and remarriage. These trends, combined with the increasing time children are taking to transition to adulthood, means that parents are now more likely to be supporting children as they prepare to retire. This dissertation examines how demands from children affect older parents as they approach retirement. Using data from the Health and Retirement Study, I ask whether parents with adolescent or dependent adult children postpone retirement to later ages than other parents. I examine retirement both prospectively, by comparing parents' retirement expectations across cohorts, and then longitudinally, by modeling one cohort's transition from working to retirement. In both analyses, I focus on the impact of children who are either dependent-aged (<18), college-aged, coresident, or financially dependent. Results from this study show that needs of children do not appear to exert much influence over their parent's retirement plans. Net of parental characteristics, demands from children do not have an independent effect on retirement outcomes. It also does not appear that children in more recent cohorts exert a greater influence on parental retirement despite greater demands from children in recent years. For some subgroups (e.g. unmarried mothers and fathers, black and Hispanic parents) having certain types of demands from children is associated with greater expectations of working at older ages, while having other types of children is associated with a lower chance of expecting to work longer. For some subgroups (e.g. unmarried mothers), having certain types of dependent children are associated with retiring later. However, for the majority of adults, retirement plans and behaviors are driven more by parental retirement readiness (e.g. wealth, pension participation, and age) rather than the needs of children.