Chapter 5 Retirement from the labor force The chapter presents some basic facts on retirement patterns and examines some reasons for the changes in behavior over time and differences across groups. Retirement is an important phenomenon in life cycle labor supply. Not only does it mean a complete withdrawal from the labor force but it also turns on a number of institutional facets such as social security and private pensions. The chapter explores a number of theoretical models and discusses empirical results. The chapter presents a close look at pensions and social security and concludes by analyzing life cycle savings behavior and looking at the status of retirees. The goal of the chapter is to lay out the important issues in retirement behavior rather than to draw definitive conclusions on the state of knowledge. A quick look at the data reveals that the most important trend among older workers in the United States is the decline in age of retirement. Because there has been a simultaneous increase in the real income of the population an obvious conjecture is that most of this reflects an income effect that induces workers to take more leisure. The discussion of pensions focuses on one empirical relationship and a number of theoretical ones. The most important empirical point is that the actuarial value of private pensions first rises but then declines once the worker continues to work beyond a certain point.