Signals matter? Large retirement responses to limited financial incentives

Do early retirement ages (ERA) provide a signal about the appropriate age to retire? We examine the impact of increasing the ERA for women in a context (the UK) where the financial incentive to retire at the ERA is very limited. Despite limited financial incentives, we find that women's employment rates at the old ERA increased by 6.3 percentage points. Our results suggest that wealth effects, credit constraints and changes to marginal financial incentives to work do not drive this effect but instead that most of the excess retirements observed at the ERA are driven by a signal to retire.