An examination of the effects of wealth and earned income on the decision to retire in the UK

This paper investigates the impact of financial wealth and earned income on the retirement decision using data from the English Longitudinal Survey of Ageing. The estimation results from a random effect dynamic probit model show that housing wealth has virtually no impact on the decision to retire, while financial wealth encourages it and earned income discourages it. The retirement decision is also found to be state dependent, and this persistence is stronger for those retirees with lower housing wealth and lower financial wealth.