Tuesday, January 20, 2009

Does Retirement Kill You?

Think your only reason for living is your job? It's OK to take an early retirement. An empirical study by Norma B. Coe and Maarten Lindeboom indicates that early retirement does not have a negative impact on your health.

Norma B. Coe
Maarten Lindeboom

The effect that health has on the retirement decision has long been studied. We examine the reverse relationship, whether retirement has a direct impact on later-life health. To identify the causal relationship, we use early retirement window offers to instrument for retirement. We find no negative effects of early retirement on men’s health, and if anything, a temporary increase in self-reported health and improvements in health of highly educated workers. While this is consistent with previous literature using Social Security ages as instruments, we also find that anticipation of retirement might be important, and bias the previous estimates downwards.

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