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Transition into Retirement Affects Life Satisfaction: Short- and Long-Term Development Depends on Last Labor Market Status and Education

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  • Martin Wetzel
  • Oliver Huxhold
  • Clemens Tesch-Römer

Abstract

The effect of retirement on life satisfaction is a research topic that received a lot of attention, yet provided heterogeneous results. The current study suggests a remedy for this situation by taking two predictors of diversity (i.e. education and last labor market status) into account. We assumed that changes in social status and changes in resources influence retirement adjustment. The social status change affects retirees in the short-term, whereas individuals’ resources indicated by education predict long-term adjustment. To disentangle these processes, we contrasted exits from full-time employment and transitions from unemployment. We used data from the German Socio-Economic Panel to estimate a multi-group, multi-episodes dual change score model. The development of life satisfaction is lastingly interrupted by retirement. A short-term increase in life satisfaction was found for both transition groups but was more pronounced for those being previously unemployed. Life satisfaction develops in the long-term education-specific: retirees who have more education show almost constant life satisfaction whereas those retirees who have less education experience a decline. The results indicate that retirement entails a major change in the way people live. Adjustment to this can be characterized by two processes: A status change enfolds in the short-term. A building of new daily routines using individuals’ resources develops in the long-term. Both processes can be interpreted in terms of cumulative inequality: last labor market status differences decrease in the short-term but remain. Educational differences increase after retirement. Copyright Springer Science+Business Media Dordrecht 2016

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  • Martin Wetzel & Oliver Huxhold & Clemens Tesch-Römer, 2016. "Transition into Retirement Affects Life Satisfaction: Short- and Long-Term Development Depends on Last Labor Market Status and Education," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 125(3), pages 991-1009, February.
    • Handle: RePEc:spr:soinre:v:125:y:2016:i:3:p:991-1009
    DOI: 10.1007/s11205-015-0862-4
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    2. Schröder, Carsten & Yitzhaki, Shlomo, 2017. "Revisiting the evidence for cardinal treatment of ordinal variables," European Economic Review, Elsevier, vol. 92(C), pages 337-358.
    3. Georg Henning & Isabel Baumann & Oliver Huxhold, 2023. "Historical and Cross-Country Differences in Life Satisfaction Across Retirement in Germany and Switzerland From 2000 to 2019," The Journals of Gerontology: Series B, The Gerontological Society of America, vol. 78(8), pages 1365-1374.
    4. Clemens Hetschko & Andreas Knabe & Ronnie Schöb, 2019. "Looking Back in Anger? Retirement and Unemployment Scarring," Demography, Springer;Population Association of America (PAA), vol. 56(3), pages 1105-1129, June.
    5. Ewa Gruszczyńska & Aleksandra Kroemeke & Nina Knoll & Ralf Schwarzer & Lisa Marie Warner, 2020. "Well-Being Trajectories Following Retirement: A Compensatory Role of Self-Enhancement Values in Disadvantaged Women," Journal of Happiness Studies, Springer, vol. 21(7), pages 2309-2325, October.
    6. Anita Abramowska-Kmon & Wojciech Łątkowski, 2021. "The Impact of Retirement on Happiness and Loneliness in Poland—Evidence from Panel Data," IJERPH, MDPI, vol. 18(18), pages 1-15, September.
    7. Kaiser, Caspar, 2022. "Using memories to assess the intrapersonal comparability of wellbeing reports," Journal of Economic Behavior & Organization, Elsevier, vol. 193(C), pages 410-442.
    8. Dusanee Kesavayuth & Robert E Rosenman & Vasileios Zikos, 2022. "Leaving the labor market: Exit routes, personality traits and well-being," PLOS ONE, Public Library of Science, vol. 17(3), pages 1-20, March.
    9. Martin Wetzel & Jonathan Wörn & Bettina Hünteler & Karsten Hank, 2022. "Heterogeneity in Trajectories of Life Satisfaction After Reunification: The Role of Individual Resources and Life Stage in Former East Germany," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 159(3), pages 1103-1123, February.
    10. Liisa-Maria Palomäki, 2019. "Does It Matter How You Retire? Old-Age Retirement Routes and Subjective Economic Well-Being," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 142(2), pages 733-751, April.
    11. Martin Wetzel & Catherine E. Bowen & Oliver Huxhold, 2019. "Level and change in economic, social, and personal resources for people retiring from paid work and other labour market statuses," European Journal of Ageing, Springer, vol. 16(4), pages 439-453, December.
    12. Vera L. Buijs & Bertus F. Jeronimus & Gerine M. A. Lodder & Nardi Steverink & Peter Jonge, 2021. "Social Needs and Happiness: A Life Course Perspective," Journal of Happiness Studies, Springer, vol. 22(4), pages 1953-1978, April.

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