Retirement blues

This paper analyses the short- and longer-term effects of retirement on mental health in ten European countries. It exploits thresholds created by state pension ages in an individual-fixed effects instrumental-variable set-up, borrowing intuitions from the regression-discontinuity design literature, to deal with endogeneity in retirement behaviour. The results display no short-term effects of retirement on mental health, but a large negative longer-term impact. This impact survives a battery of robustness tests, and applies to women and men as well as people of different educational and occupational backgrounds similarly. Overall, the findings suggest that reforms inducing people to postpone retirement are not only important for making pension systems solvent, but with time could also pay a mental health dividend among the elderly and reduce public health care costs.     

Ill health and retirement in Britain: a panel data-based analysis

We examine the effect of ill health on retirement decisions in Britain, using the British Household Panel Survey (1991-1998). As self-reported health status is likely to be endogenous to the retirement decision, we instrument self-reported health by a constructed 'health stock' measure using a set of health indicator variables and personal characteristics, as suggested by Bound et al. (Bound, J., Schoenbaum, M., Stinebrickner, T.M., Waidmann, M., 1999. The dynamic effects of health on the labor force transitions of older workers. Labour Economics 6, 179-202). Using a range of econometric techniques, we show that adverse shocks to individual health stocks predict individual retirement behaviour among workers aged from 50 until state pension age. We compare responses of economic activity to constructed health measures with that arising using direct indicators of functional limitations and specific health problems. We also examine the dynamics of health shocks and whether adverse and positive health shocks have symmetric effects on transitions in and out of economic activity.     

Timing of retirement and mortality - A cohort study of Swedish construction workers

Recent studies indicate that early retirement per se may have a negative effect on health to such an extent that it increases mortality risk. One type of early retirement often referred to in these studies is retirement with disability pension/benefit. Given the overall objective of disability benefit programmes – to help the disabled live socially and economically satisfactory lives, freed from exposure to employment health hazards and thus avoid further declines in health – the finding is challenging. This paper examined the relationship between timing of retirement and mortality using a cohort of Swedish construction workers. The mortality risk of disability pensioners – excluding those with diagnoses normally connected to increased mortality – was compared with the risk of those continuing to work. Although initial indications were in line with earlier results, it became obvious that the increased mortality risk of disability pensioners did not depend on early retirement per se but on poor health before early retirement not explicitly recognized in the diagnosis on which the disability pension rested. The results indicate that there are no general differences in mortality depending on timing of retirement. Future studies of mortality differences arising from working or not working must sufficiently control for health selection effects into the studied retirement paths.     

Subjective health measures and state dependent reporting errors

The use of subjective health measures in empirical models of labour supply and retirement decisions has frequently been criticized. Responses to questions concerning health may be biased due to financial incentives and the willingness to conform to social rules. The eligibility conditions for some social security allowances, notably Disability Insurance benefits, are contingent upon bad health. Even if the decision to apply for a disability allowance is to some extent motivated by financial considerations or a relatively strong preference for leisure, respondents will be inclined to play down these motives and emphasize the importance of their health condition. As a consequence, reporting errors may depend on the labour market status of the respondent and self-reported health variables will be endogenous in labour supply and retirement models. The objective of this paper is to assess the importance of state dependent reporting errors in survey responses and to propose and estimate a model that can be used to account for this kind of systematic mis-reporting. The estimation results indicate that among respondents receiving Disability Allowance, reporting errors are large and systematic. Using such subjective health measures in retirement models may therefore seriously bias the parameter estimates and the conclusions drawn from these.     

Gender and Social Class Differences in the Association between Early Retirement and Health in Spain

ObjectivesWe sought to examine the association between reasons for early retirement and health status and to assess whether this association differs by gender and social class.MethodsThe sample was all people currently working or retired between 50 and 64 years of age (2,497 men and 1,420 women) who were interviewed in the 2006 Spanish National Health Survey. The health outcomes analyzed were self-perceived health status and mental health. Multiple logistic regression models stratified by gender and occupational social class were fitted.ResultsFemale manual workers who were forced into early retirement due to organizational reasons were more likely to report poor self-perceived health status (adjusted odds ration [aOR], 4.04; 95% confidence interval [CI], 1.44–11.32) and poor mental health (aOR, 2.70; 95% CI, 1.15–6.33), whereas no such association was observed among male workers or among female nonmanual workers. Early retirement on health grounds was associated with both health outcomes in all groups, but retirement because of age, voluntary retirement, and retirement for other reasons were not related to poor health outcomes in any group analyzed.DiscussionForced early retirement owing to organizational reasons is related to poor health indicators only among female manual workers. Results highlight the importance of paying more attention to the potential vulnerability of female manual workers in downsizing processes as well as in early retirement policies.     

Relation between job mobility during working life and health state after retirement: a cross sectional study of 627 subjects living in the Paris area.

The relation between job mobility during working life and health state after retirement was studied in a random sample of 627 retired men and women living in the Paris area who were beneficiaries of an interprofessional supplementary pension fund. State of health was evaluated by the number of health impairments that these subjects reported at the time of interview. Job mobility was defined by a dichotomic variable based on the number of different companies and branches of economic activity in which the subjects had worked. This information was obtained from the individual records supplied by the pension fund. For both sexes, a significant relation was found between the number of health impairments and job mobility: for men, the mean number of impairments was 1.7 in the high mobility group and 1.3 in the low mobility group, and for women these numbers were respectively 2.1 and 1.7. This finding seemed independent of the effects of selection and of the effects of factors such as age at the time of interview, age at retirement, previous diseases, past work accidents, and previous occupational exposures. These results suggest that a high job mobility during working life might be a risk factor for health after retirement.     

Geographies of the impact of retirement on health in the United Kingdom

This paper explores how the impact of retirement on self-assessed illness varies spatially across the UK. Curves of age-specific limiting long term illness rates reveal a ‘retirement kink'—where the rise in illness rates with age slows or declines at retirement age indicating possible health improvement after retirement. The kink is negligible in the affluent South East and most prominent in the coalfield and former industrial districts. It is likely that the kink is attributable to hidden unemployment and health-related selective migration but additionally that in certain areas retirement is associated with improvements in self-assessed health.     

Relation between job mobility during working life and health state after retirement: a cross sectional study of 627 subjects living in the Paris area

The relation between job mobility during working life and health state after retirement was studied in a random sample of 627 retired men and women living in the Paris area who were beneficiaries of an interprofessional supplementary pension fund. State of health was evaluated by the number of health impairments that these subjects reported at the time of interview. Job mobility was defined by a dichotomic variable based on the number of different companies and branches of economic activity in which the subjects had worked. This information was obtained from the individual records supplied by the pension fund. For both sexes, a significant relation was found between the number of health impairments and job mobility: for men, the mean number of impairments was 1.7 in the high mobility group and 1.3 in the low mobility group, and for women these numbers were respectively 2.1 and 1.7. This finding seemed independent of the effects of selection and of the effects of factors such as age at the time of interview, age at retirement, previous diseases, past work accidents, and previous occupational exposures. These results suggest that a high job mobility during working life might be a risk factor for health after retirement.     

A HEALTH PRODUCTION MODEL WITH ENDOGENOUS RETIREMENT

We formulate a stylized structural model of health, wealth accumulation and retirement decisions building on the human capital framework of health and derive analytic solutions for the time paths of consumption, health, health investment, savings and retirement. We argue that the literature has been unnecessarily restrictive in assuming that health is always at the ‘optimal’ health level. Exploring the properties of corner solutions, we find that advances in population health decrease the retirement age, whereas at the same time, individuals retire when their health has deteriorated. This potentially explains why retirees point to deteriorating health as an important reason for early retirement, whereas retirement ages have continued to fall in the developed world, despite continued improvements in population health and mortality. In our model, workers with higher human capital invest more in health and, because they stay healthier, retire later than those with lower human capital whose health deteriorates faster. Copyright © 2012 John Wiley & Sons, Ltd.     

Retirement effects on health in Europe

What are the health impacts of retirement? As talk of raising retirement ages in pensions and social security schemes continues around the world, it is important to know both the costs and benefits for the individual, as well as the governments’ budgets. In this paper we use the Survey of Health, Ageing and Retirement in Europe (SHARE) dataset to address this question in a multi-country setting. We use country-specific early and full retirement ages as instruments for retirement behavior. These statutory retirement ages clearly induce retirement, but are not related to an individual's health. Exploiting the discontinuities in retirement behavior across countries, we find significant evidence that retirement has a health-preserving effect on overall general health. Our estimates indicate that retirement leads to a 35 percent decrease in the probability of reporting to be in fair, bad, or very bad health, and an almost one standard deviation improvement in the health index. While the self-reported health seems to be a temporary impact, the health index indicates there are long-lasting health differences.     

The impact of chronic illness on workforce participation and the need for assistance with household tasks and personal care by older Australians

People, along with their families, feel the impact of chronic illness in many areas of their lives. It has been known that those with chronic illness leave the workforce earlier than their peers, have lower incomes and often need additional support to manage their health and lives. However, limited information is available about whether chronic illness is already present prior to retirement, or has developed subsequently. Similarly, we know little about what personal and household assistance is needed by people with chronic illness. In this study, a random sample of 10 000 members of National Seniors Australia, stratified by age and state of residence, were surveyed by post between August and September 2009 and asked about their chronic illnesses along with their age at diagnosis. In addition, participants were asked about their need for assistance with everyday household tasks and personal care. Responses were received from 4574 respondents, a response rate of 45.7%. Of those responding, 82.2% reported having at least one chronic illness at the time of the survey. The study confirms that ill health leads to earlier retirement from the workforce, and those who are sickest require more assistance with their household tasks and personal care. Each additional chronic illness present at age 50 reduced working life by a year, and each present at age 60 by 0.7 years. Diabetes, arthritis and depression were significantly related to earlier retirement. The impact was greatest for both continued workforce participation and need for assistance for those suffering from depression or anxiety. The relationships between health, workforce participation and need for assistance in daily activities are complex. Further research is required to uncover this complexity; nevertheless, the findings highlight the need to review the adequacy of current social and health policy for this particular population.     

The impact of health on individual retirement plans: self‐reported versus diagnostic measures

We reassess the impact of health on retirement plans of older workers using a unique survey‐register match‐up which allows comparing the retirement effects of potentially biased survey self‐reports of health to those of unbiased register‐based diagnostic measures. The aim is to investigate whether even for narrowly defined health measures a divergence exists in the impacts of health on retirement between self‐reported health and objective physician‐reported health. Our sample consists of older workers and retirees drawn from a Danish panel survey from 1997 and 2002, merged to longitudinal register data. Estimation of measurement error‐reduced and selection‐corrected pooled OLS and fixed effects models of retirement show that receiving a medical diagnosis is an important determinant of retirement planning for both men and women, in fact more important than economic factors. The type of diagnosis matters, however. For men, the largest reduction in planned retirement age occurs for a diagnosis of lung disease while for women it occurs for musculo‐skeletal disease. Except for cardiovascular disease, diagnosed disease is more influential in men's retirement planning than in women's. Our study provides evidence that men's self‐report of myalgia and back problems and women's self‐report of osteoarthritis possibly yield biased estimates of the impact on planned retirement age, and that this bias ranges between 1.5 and 2 years, suggesting that users of survey data should be wary of applying self‐reports of health conditions with diffuse symptoms to the study of labor market outcomes. On the other hand, self‐reported cardiovascular disease such as high blood pressure does not appear to bias the estimated impact on planned retirement. Copyright © 2009 John Wiley & Sons, Ltd.     

Prediction of early retirement on the basis of a health examination. An 11-year follow-up of 264 male employees in a Swedish pulp and paper company

In a Swedish pulp and paper company 264 men in the age groups 36, 46, and 56 years underwent a health examination in 1972. An 11-year follow-up in respect of early retirement was performed. On the basis of collected data, five scales to assess work ability were established. The scales were (i) self-assessment of health and work capacity, (ii) the doctor's evaluation of general medical work capacity, (iii) the doctor's assessment of medical adaptation to work, (iv) aerobic work capacity, predicted from a submaximal bicycle test, and (v) work performance, determined from an interview with the subject's nearest superior. Multivariate analysis of the five scales and about 30 other variables showed that general medical work capacity was one of the strongest predictors of early retirement. It was also shown that the medical variables were better predictors of early retirement than the psychological and sociological ones. It was concluded that it is possible to predict early retirement on the basis of a health examination within an occupational health organization.     

An exploratory study of poor adjustment styles among retirees

This paper focuses on the one third of retirees who report difficulty in making the transition from work to retirement. On the basis of Levy's [16] research, it is hypothesized that there are different styles of poor adjustment that have different consequences for the retirees experiencing them. Data from 487 male and female retirees identify four poor adjustment styles--poor health, negativism, change adaptation and retirement reluctance. While the latter two responses to retirement tend to be problems only in the short term, the former two may have far reaching consequences. Health related retirement and negativism about retiring were linked with low activity and involvement, poor physical and mental health, inadequate income and low life satisfaction in the years following retirement.     

The effect of retirement on physical health.

This prospective study compared pre- to post-retirement changes in physical health among male retirees with changes among age peers who continued to work. The 229 retirees and 409 workers aged 55-73 at follow-up were all participants in the Veterans Administration Normative Aging Study. Physical health at baseline and follow-up (three to four years apart) was rated on a four-point scale according to the findings of medical examinations. Although physical health declined generally over time, regression analyses showed no significant difference between eventual retirees and continuing workers on health change, after controlling for age and excluding men who retired due to illness or disability. Among retirees alone, pre- to post-retirement health change was also not significantly associated with several circumstances which purportedly make the retirement transition more stressful, such as mandatory retirement or retirement to a reduced standard of living. The results of this study of physical health, which corroborate those of other studies based on self-reported health measures and mortality data, support the conclusion that the event of retirement does not influence the risk of health deterioration.     

Retirement and mental health: analysis of the Australian national survey of mental health and well-being

Nation-wide research on mental health problems amongst men and women during the transition from employment to retirement is limited. This study sought to explore the relationship between retirement and mental health across older adulthood, whilst considering age and known risk factors for mental disorders. Data were from the 1997 National Survey of Mental Health and Well-being, a cross-sectional survey of 10,641 Australian adults. The prevalence of depression and anxiety disorders was analysed in the sub-sample of men (n = 1928) and women (n = 2261) aged 45-74 years. Mental health was assessed using the Composite International Diagnostic Instrument. Additional measures were used to assess respondents' physical health, demographic and personal characteristics. The prevalence of common mental disorders diminished across increasing age groups of men and women. Women aged 55-59, 65-69, and 70-74 had significantly lower rates of mental disorders than those aged 45-49. In contrast, only men aged 65-69 and 70-74 demonstrated significantly lower prevalence compared with men aged 45-49. Amongst younger men, retirees were significantly more likely to have a common mental disorder relative to men still in the labour force; however, this was not the case for retired men of, or nearing, the traditional retirement age of 65. Men and women with poor physical health were also more likely to have a diagnosable mental disorder. The findings of this study indicate that, for men, the relationship between retirement and mental health varies with age. The poorer mental health of men who retire early is not explained by usual risk factors. Given current policy changes in many countries to curtail early retirement, these findings highlight the need to consider mental health, and its influencing factors, when encouraging continued employment amongst older adults.     

The impact of health changes on labor supply: evidence from merged data on individual objective medical diagnosis codes and early retirement behavior

The justification bias in the estimated impact of health shocks on retirement is mitigated by using objective health measures from a large, register-based longitudinal data set including medical diagnosis codes, along with labor market status, financial, and socio-economic variables. The duration until retirement is modeled using single and competing risk specifications, observed and unobserved heterogeneity, and flexible baseline hazards. Wealth is used as a proxy for elapsed duration to mitigate the potential selection bias stemming from conditioning on initial participation. The competing risk specification distinguishes complete multiperiod routes to retirement, such as unemployment followed by early retirement. A result on comparison of coefficients across all states is offered. The empirical results indicate a strong impact of health changes on retirement and hence a large potential for public policy measures intended to retain older workers longer in the labor force. Disability responds more to health shocks than early retirement, especially to diseases of the circulatory, respiratory, and musculoskeletal systems, as well as mental and behavioral disorders. Some unemployment spells followed by early retirement appear voluntary and spurred by life style diseases.     

Back pain, back abnormalities, and competing medical, psychological, and social factors as predictors of sick leave, early retirement, unemployment, labour turnover and mortality: a 22 year follow up of male employees in a Swedish pulp and paper company

A total of 391 male employees in a Swedish pulp and paper company were followed up for 22 years. As a part of a health examination in 1961 back pain reported by the subjects and abnormalities of the back as judged by the physicians were investigated with respect to predictive power regarding sick leave, early retirement, unemployment, labour turnover, and mortality during the follow up period. Univariate analysis showed that abnormalities of the back were better than back pain for predicting early retirement. Neither back pain nor back abnormalities had any predictive power with respect to long term sick leave, labour turnover, or mortality. Multivariate analyses of 26 variables were performed. Both self assessment of general health and back abnormalities were predictive for early retirement with a diagnosis of back disorder on the retirement certificate but self assessed health was a stronger predictor. Age, smoking, and neuroticism were predictors regarding early retirement for all diagnoses. Education had a negative association; neuroticism did not predict early retirement with a diagnosis of back disorder.     

Back pain, back abnormalities, and competing medical, psychological, and social factors as predictors of sick leave, early retirement, unemployment, labour turnover and mortality: a 22 year follow up of male employees in a Swedish pulp and paper company.

A total of 391 male employees in a Swedish pulp and paper company were followed up for 22 years. As a part of a health examination in 1961 back pain reported by the subjects and abnormalities of the back as judged by the physicians were investigated with respect to predictive power regarding sick leave, early retirement, unemployment, labour turnover, and mortality during the follow up period. Univariate analysis showed that abnormalities of the back were better than back pain for predicting early retirement. Neither back pain nor back abnormalities had any predictive power with respect to long term sick leave, labour turnover, or mortality. Multivariate analyses of 26 variables were performed. Both self assessment of general health and back abnormalities were predictive for early retirement with a diagnosis of back disorder on the retirement certificate but self assessed health was a stronger predictor. Age, smoking, and neuroticism were predictors regarding early retirement for all diagnoses. Education had a negative association; neuroticism did not predict early retirement with a diagnosis of back disorder.     

Health insurance and retirement behavior: evidence from the health and retirement survey

This paper studies the role of health insurance in the retirement decisions of older workers. As policymakers consider mechanisms for how to increase access to affordable health insurance for the near elderly, considerations of the potential labor force implications of such policies will be important to consider--potentially inducing retirements just at a time when the labor force is shrinking. Using data from the 1992 and 1996 waves of the Health and Retirement Survey, this study demonstrates that access to post-retirement health insurance has a large effect on retirement. Among older male workers, those with retiree health benefit offers are 68% more likely to retire (and those with non-employment based insurance are 44% more likely to retire) than their counterparts who would lose employment-based health insurance upon retirement. In addition, the study demonstrated that in retirement models, when retiree health benefits are controlled for, the effects of pension coverage are reduced, suggesting that these effects may have been overestimated in the prior literature.