Retirement patterns

Population ageing and financial cost for social security systems has lead to changes in retirement rules in systems around the world. To give incentives for late retirement, systems has changed from defined benefits to defined contributions systems (in reformed countries), mortality tables have been taken into account when setting the benefits (Brazil) and minimum age of retirement have been raised. In this regard it is worth mentioning that raising minimum age of retirement can have little effect if implicit rules fail to generate incentives for people to delay retirement. Gruber and Wise, among others, have carefully analyzed this phenomenon for European countries. As an example, in the Mexican IMSS system, the legal retirement age is 65 but workers can retire at 60 with a cost of 3% of their pension by each year of retirement before 65. Mexican economist Emma Aguila has shown that this cost for early retirement does not generate the incentives for workers to delay retirement. In fact, as can be seen in the next figure, most people at IMSS retire at 60 years old.