Retirement Before Age 65 Is a Growing Trend in the Private Sector

In response to a congressional request, GAO provided information on private sector retirement patterns concerning: (1) the extent people are receiving private pension income before they are 65 years old; (2) if there has been a growing trend in the receipt of early private pension income; and (3) the extent early private pension receipt is due to disabilities or health problems.

GAO found that about half of the individuals who received private pensions in 1983 started to receive them by age 62, and almost 60 percent started to receive them before reaching 65. The proportion of people receiving private pension income before they reached 65 increased rapidly between 1973 and 1983. The proportion of men who received private pension income doubled, and women experienced a substantial, but smaller, increase in private pension receipt. In addition, the ratio of private pension recipients to private sector workers more than doubled over a 10-year period. The increase in early private pension receipt may reflect the growth in pension coverage since World War II and a trend toward earlier retirement. It is impossible to distinguish disability benefits from retirement benefits. However, assuming that: (1) persons receiving government disability benefits were receiving a disability pension as opposed to a retirement pension from their employer; and (2) all men receiving social security benefits at ages under 62 are receiving disability benefits based on their own earnings records, GAO found that about one-third of male private pension recipients age 50 to 61 were receiving social security disability payments, supplemental security income, or workers' compensation. However, the proportion of private pension recipients who receive private disability pensions may be underestimated because some persons may have retired on private disability pensions and may not be receiving any government-provided disability benefits.