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Does retirement improve health and life satisfaction?
Author(s) -
Gorry Aspen,
Gorry Devon,
Slavov Sita Nataraj
Publication year - 2018
Publication title -
health economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.55
H-Index - 109
eISSN - 1099-1050
pISSN - 1057-9230
DOI - 10.1002/hec.3821
Subject(s) - social security , earnings , life satisfaction , health and retirement study , mental health , health care , stock (firearms) , psychology , test (biology) , gerontology , demographic economics , business , actuarial science , economics , medicine , finance , economic growth , social psychology , psychiatry , mechanical engineering , paleontology , engineering , market economy , biology
We utilize panel data from the Health and Retirement Study to investigate the impact of retirement on physical and mental health, life satisfaction, and health care utilization. Because poor health can induce retirement, we instrument for retirement using eligibility for Social Security and employer‐sponsored pensions and coverage by the Social Security earnings test. We find strong evidence that retirement improves reported health, mental health, and life satisfaction. In addition, we find evidence of improvements in functional limitations in the long run. Although the impact on life satisfaction occurs within the first 4 years of retirement, many of the improvements in health show up four or more years later, consistent with the view that health is a stock that evolves slowly. We find no evidence that the health improvements are driven by increased health care utilization. In fact, results suggest decreased utilization in some categories.