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The Effects of Retirement on Physical and Mental Health Outcomes

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  • Dhaval Dave
  • Inas Rashad
  • Jasmina Spasojevic

Abstract

While numerous studies have examined how health affects retirement, few have analyzed the impact in the reverse direction. Using the Health and Retirement Study (1992–2005), this paper estimates the effects of retirement on indicators of physical and mental health. To account for biases from unobserved selection and endogeneity, panel data methodologies are used, augmented by counterfactual and specification checks. Results indicate that complete retirement leads to a 5–14% increase in difficulties associated with mobility and daily activities, 4–6% increase in illnesses, and 6–9% decline in mental health (evaluated relative to the sample mean). The adverse health effects are mitigated if the individual is married, engages in physical activity, or continues to work part‐time post‐retirement. Evidence also suggests larger adverse health effects in the event of involuntary retirement. Retiring at a later age may lessen or postpone poor health outcomes for older adults, raise well‐being, and reduce health care services utilization.

Suggested Citation

  • Dhaval Dave & Inas Rashad & Jasmina Spasojevic, 2008. "The Effects of Retirement on Physical and Mental Health Outcomes," Southern Economic Journal, John Wiley & Sons, vol. 75(2), pages 497-523, August.
    • Handle: RePEc:wly:soecon:v:75:y:2008:i:2:p:497-523
    DOI: 10.1002/j.2325-8012.2008.tb00916.x
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    References listed on IDEAS

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    5. Wang, Tianyu & Sun, Ruochen & Sindelar, Jody L. & Chen, Xi, 2023. "Occupational Differences in the Effects of Retirement on Hospitalizations for Mental Illness among Female Workers: Evidence from Administrative Data in China," IZA Discussion Papers 16545, Institute of Labor Economics (IZA).
    6. Pierre-Jean Messe & François-Charles Wolff, 2019. "Healthier when retiring earlier? Evidence from France," Applied Economics, Taylor & Francis Journals, vol. 51(47), pages 5122-5143, October.
    7. Yuanrong Xu, 2023. "The effect of retirement on health and mortality in the United States," Journal of Population Research, Springer, vol. 40(2), pages 1-22, June.
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    11. Fougère, Denis & d'Albis, Hippolyte & Gouëdard, Pierre, 2020. "Slow Down Before You Stop: The Effect of the 2010 French Pension Reform on Older Teachers' Sick Leaves," CEPR Discussion Papers 15142, C.E.P.R. Discussion Papers.
    12. Marta Golin, 2022. "The effect of broadband Internet on the gender gap in mental health: Evidence from Germany," Health Economics, John Wiley & Sons, Ltd., vol. 31(S2), pages 6-21, October.
    13. Asal Pilehvari & Wen You & Xu Lin, 2023. "Retirement’s impact on health: what role does social network play?," European Journal of Ageing, Springer, vol. 20(1), pages 1-20, December.
    14. Chen, Xi, 2022. "The impact of spousal and own retirement on health: Evidence from urban China," World Development, Elsevier, vol. 159(C).
    15. Eibich, Peter, 2015. "Understanding the effect of retirement on health: Mechanisms and heterogeneity," Journal of Health Economics, Elsevier, vol. 43(C), pages 1-12.
    16. Egidio Riva & Mario Lucchini & Carlotta Piazzoni, 2022. "The effect of job quality on quality of life and wellbeing in later career stages: A multilevel and longitudinal analysis on older workers in Europe," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 17(4), pages 1993-2015, August.

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