Abstract
Older Americans have been retiring later for a number of reasons, including jobs that are becoming less physically demanding, the shift from defined benefit to defined contribution pensions, and changes in Social Security’s incentives. What are the implications of working longer for workers’ mortality and health? Answering this question is complicated, because work and health are jointly determined – healthy people with lower mortality tend to work longer. Previous studies looking at the causal effect of work on mortality and health have found mixed results and have tended to focus on the effects of early retirement, not delayed retirement. A simple assumption would be that the relationship between them is symmetric. But it is unclear that that assumption is correct – after all, people who decide to keep working are likely a healthier group than those who stop early. This paper uses administrative data from the Netherlands and exploits policy variation designed to delay retirement to explore the links between work and health outcomes.
The paper found that:
- Working longer is associated with lower mortality, depression, and diabetes risk for both men and women in ordinary linear regression models.
- In an instrumental variable approach that takes into account the joint relationship between work and mortality, delayed retirement reduces the 5-year mortality rate for men ages 62-65 by 2.4 percentage points, or a 32-percent reduction relative to non-workers.
- However, the same analysis finds no significant relationship between delayed retirement and the health conditions studied.
- The effect on male life expectancy depends on how permanent the effect is. A 32-percent reduction in mortality increases age-60 life expectancy by about three months if the effect applies only to the ages studied, but longer if the effect is permanent.
- For women, the weakness of the instrument variable results in insignificant results.
The policy implications of the findings are:
- Policies that delay retirement may increase longevity, especially for men, but have no detectable effect on depression or diabetes during one’s 60s.
- As they consider policies that could lengthen careers, policymakers could take into account the possibility that lives may also be extended, and consider the potential effects on the benefits paid out.
FAQs
The findings are mixed. Most research shows that delayed retirement helps reduce mortality. A couple of studies show no relationship, and still others show that delayed retirement is detrimental or that early retirement is beneficial.
Does retirement age impact mortality? ›
In addition, retiring exactly at age 62 increases the odds of dying by 23 percent relative to men retiring at age 63 and by 24 percent relative to men retiring at age 64. A group with relatively severe health problems waiting for their 62nd birthday to take benefits could create this result.
Does delaying retirement increase life expectancy? ›
In an instrumental variable approach that takes into account the joint relationship between work and mortality, delayed retirement reduces the 5-year mortality rate for men ages 62-65 by 2.4 percentage points, or a 32-percent reduction relative to non-workers.
What is the disadvantage of retiring late? ›
Con: You Have Less Time To Enjoy Retirement
With age inevitably comes declining health and reduced physical and mental capacity to enjoy life. If you dreamed of starting a business, you'll have less time to work on it and grow it. If you plan to age at home, the older you get, the harder home maintenance will become.
What is the average life expectancy after retirement? ›
According to their table, for instance, the average remaining lifespan for a 65-year-old woman is 19.66 years, reaching 84.66 years old in total. The remaining lifespan for a 65-year-old man is 16.94 years, reaching 81.94 years in total.
Is it true the earlier you retire, the longer you live? ›
The literature on the relationship between retirement age and longevity is still developing. The findings are mixed. Most research shows that delayed retirement helps reduce mortality.
At what age do you realize your mortality? ›
No one likes to think about a time when they won't be here and conversations around death are certainly some of the hardest we can have… but it seems that we do often contemplate the subject within ourselves, with new research revealing that 26 is the average age that people first start to consider their own death.
Is delaying retirement worth it? ›
Delaying retirement gives you more time to save for your golden years and less time to live off your savings. Many retirees fear they will run out of money before they die, so the more time you spend saving, the less you'll depend on that nest egg when the time comes to stop working.
At what age do you get 100% of your Social Security? ›
The full retirement age is 66 if you were born from 1943 to 1954. The full retirement age increases gradually if you were born from 1955 to 1960 until it reaches 67. For anyone born 1960 or later, full retirement benefits are payable at age 67. The chart on the next page lists the full retirement age by year of birth.
What is the best age to retire at? ›
The normal retirement age is typically 65 or 66 for most people; this is when you can begin drawing your full Social Security retirement benefit. It could make sense to retire earlier or later, however, depending on your financial situation, needs and goals.
Claiming Social Security too early
Unfortunately, most people don't — and many early retirees regret how soon they claimed their Social Security benefits. Research from the National Bureau of Economic Research (NBER) revealed that one-fifth of older Americans wish they had put off their Social Security claim.
What is the main reason people choose to delay retirement? ›
They haven't saved enough. One major reason why people are postponing retirement is because they haven't saved enough.
Does anyone regret retiring early? ›
“For most Americans, early retirement isn't just a decision to take the longest vacation of their lives — it's one of the biggest money mistakes that they will regret,” wrote economics professor and author Laurence J. Kotlikoff in a column for CNBC.
What percent of the US population dies before age 80? ›
According to 2015 age-specific mortality rates, almost 60 percent of the 2015 birth cohort will live past 80, while more than 20 percent will die before 70.
How long can a healthy 75 year old expect to live? ›
The study, supported by the American Insurance Group, found that, on average, a 75-year-old American woman with no chronic conditions will live 17.3 additional years (that's to more than 92 years old).
What is considered a good age to live to? ›
People in their 60s are tricky to classify. They are not commonly thought of as young, but they did not get to be really old either. A death in one's 70s is more-or-less accepted as normal, and the 80s are widely considered to be ripe old age and a very full life.
How does age affect mortality rates? ›
However, the total death rate continues to rise across adulthood due to increased deaths from diseases. You can see that the rise becomes exponential8 – for example, 80-year-olds are around ten times more likely to die than 60-year-olds. As we age, our cells get damaged by injury, stress, and DNA mutations.
What are the disadvantages of raising the retirement age? ›
What it breaks down to is raising the retirement age could lead to increased inequality in the workforce, as people with higher incomes and better health will be able to stay employed longer than those with lower incomes and poorer health.”
Does life expectancy change as you get older? ›
Changes in Life Expectancy
Each year a person lives means they have survived multiple potential causes of death. This means that life expectancy actually can increase with age.
