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Health and retirement age: Comparison of expectations and actual retirement

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  • Ilmakunnas, Pekka
  • Ilmakunnas, Seija

Abstract

Aim: We examine the relationship between the subjective assessment of health status and retirement by using information on expected and actual retirement ages. Methods: Subjective data from cross-sectional surveys, conducted in Finland in 2003 and 2008, are linked to information on actual retirement age from register data from 2003-2013. Regression models are estimated for actual and expected retirement ages. Results: While the health status is positively correlated with both actual and anticipated full-time retirement age, the actual age of retirement is less sensitive to health. On average, individuals tend to retire later than they had anticipated. We examine potential biases in the health-retirement relationship. Measurement error in regard to health status biases the results downwards. Using data on observed retirement ages, omitting those who do not retire during the data period, leads to a selection problem. Ignoring the selection also leads to a downwards bias in the health - retirement age connection. As a more exogenous health variable we use health shocks, which are measured by average annual days of absence due to sickness in the follow-up period. These shocks are negatively related to retirement age in a subsample of initially healthy individuals. Conclusions: When subjective assessment of health is used for explaining retirement behavior, the effects of health can often be underestimated rather than overestimated. To lengthen working careers, attention should be given to both the ability (health) and willingness (perceptions of proper retirement age) of people to continue longer at work.

Suggested Citation

  • Ilmakunnas, Pekka & Ilmakunnas, Seija, 2018. "Health and retirement age: Comparison of expectations and actual retirement," MPRA Paper 102618, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:102618
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    3. Radl, Jonas & Fernández, Juan J, 2022. "Pension Policy Literacy and Retirement Expectations: A Cross-Country Survey Experiment," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 77(4), pages 739-749.
    4. Böckerman, Petri & Bryson, Alex & Ilmakunnas, Ilari & Ilmakunnas, Pekka, 2024. "Does High Involvement Management Make You Work Longer? Insights from Linked Survey and Register Data," IZA Discussion Papers 16827, Institute of Labor Economics (IZA).
    5. Bauer, Ann Barbara & Eichenberger, Reiner, 2021. "Worsening workers' health by lowering retirement age: The malign consequences of a benign reform," The Journal of the Economics of Ageing, Elsevier, vol. 18(C).
    6. Chiara Heller & Stefanie Sperlich & Fabian Tetzlaff & Siegfried Geyer & Jelena Epping & Johannes Beller & Juliane Tetzlaff, 2022. "Living longer, working longer: analysing time trends in working life expectancy in Germany from a health perspective between 2002 and 2018," European Journal of Ageing, Springer, vol. 19(4), pages 1263-1276, December.
    7. Linden, Mikael, 2023. "Retirement Age Trap: RDD Approach to Terminated Retirement Spells," MPRA Paper 119168, University Library of Munich, Germany.

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    More about this item

    Keywords

    self-assessed health; sickness absences; retirement; expectations;
    All these keywords.

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • I10 - Health, Education, and Welfare - - Health - - - General
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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