Despite a prevailing belief that health and life satisfaction decline in retirement, the National Bureau of Economic Research (NBER) says they actually improve, at least in the initial few years of retirement.
While some have determined that retirees are socially
isolated and have a diminished sense of purpose, they have more time for
leisure, “which may reduce physical and mental stress, improving both subjective
well-being and health,” NBER says.
“Our instrumental variables show that retirement improves both health and life satisfaction. The improvements in life satisfaction and reported health are immediate and remain four or more years after retirement,” NBER says. “The improvements in objective health measures are not apparent immediately, but show up four or more years after retirement. The delayed health impact is not surprising considering that health is a stock variable that is unlikely to rapidly change over time.” Additionally, NBER found that early retirees do not make increased use of the medical system.
NBER bases its findings on data from the Health and Retirement Study (HRS) that surveyed people about their physical and mental health.
The National Bureau of Economic Research said it decided to study health and life satisfaction in retirement to guide policymakers on legislation that could extend the time that people spend working and delay their Social Security and Medicare benefits, particularly in light of longevity continuing to increase. “For example, if retirement worsens health and generates increased health care utilization, then policies that delay retirement may further Medicare’s finances and make individuals better off,” the Bureau said. “Alternatively, if retirement improves health, then policies that promote delayed retirement to shore up the fiscal budget may have hidden fiscal costs and negatively impact individuals.”
NBER’s full report, “Does Retirement Improve Health and Life Satisfaction,” can be accessed here.