Offering retiree health insurance to public-sector employees can actually save their employers money in the long run and has a major impact on whether workers stay in the workforce until age 65 or decide to retire earlier.

That's according to a report by the National Bureau of Economic Research that studied the behavior of public school employees in Illinois to see how responsive they would be to the introduction of a retiree health insurance program. The findings have major implications for government budgets that have been overloaded with debt associated with pension benefits and retiree health care costs.

NBER found that the introduction of a retiree health insurance program prompted many older workers to retire earlier than they initially would have — an average of two years earlier.

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