A Longitudinal Study of Well-Being of Older Europeans: Does Retirement Matter?

Abstract

We examine determinants of financial and subjective well-being, in particular poverty and depression, among older individuals in Europe. We do so using the 2004, 2006, and 2010 waves of the Survey of Health Ageing and Retirement in Europe and estimating dynamic panel data and binary choice transition models. We find a number of common effects across financial and subjective well-being. Unemployment, disabilities, serious health conditions, lower education, being female, and not being married increase the probability of poverty or depression. Conversely, healthy individuals, those with higher levels of education, males, and married individuals have higher probabilities of exiting poverty or depression. The effect of retirement is of special policy interest. It turns out to be crucial to control for endogeneity (i.e. the possibility of reverse causality) of retirement. If we don’t control for endogeneity, retirement appears to increase both the risk of poverty and of depression. Once we control for endogeneity using instrumental variables, these negative effects disappear and point to weak evidence that retirement induced through eligibility for retirement pensions may be protective against poverty and depression.

Self-Reported Change in Quality of Life with Retirement and Later Cognitive Decline: Prospective Data from the Nurses’ Health Study

“…Finally, to reduce any potential bias due to reverse causation [16] where women may have first had impaired cognition that led to early retirement and / or a poorer subjective assessment of QOL after retirement, we conducted several restricted analyses excluding women who had the worst cognitive function at the initial assessment (defined as those in the worst 10% of the distribution or alternatively as those whose TICS were below 34), women who completed less than all four of the cognitive telephone interviews, women with >1 subjective memory complaints or women whose retirement age was below 65. To evaluate if QOL change with retirement and cognition may be mediated by depression, we also restricted the analysis to those without evidence of depression or severe depression symptoms as of baseline cognitive assessment (no antidepressant use and SF-36 Vitality score ≥50 and SF-36 Mental Health score >=53).…”

“…However, data are scarce on this topic. Although the influence of retirement on quality of life (QOL) and health has been greatly debated [6], with studies finding adverse [7–9], no [8, 10, 11], or beneficial [11–16] associations, any putative effects may depend on pre-retirement work conditions (e.g., whether satisfactory or not), type of retirement (e.g., whether voluntary or not), time since retirement and the health outcome studied. Overall, studies have focused on physical or mental health as outcomes, with no direct evaluations of associations with cognitive function.…”

Does Retirement Make You Happy? A Simultaneous Equations Approach

“…In Fonseca et al (2014), we examined the effect of retirement on subjective well-being within 12 countries, using panel data from the U.S. Health and Retirement Study (HRS) and the Survey of Health, Ageing, and Retirement in Europe (SHARE). In estimating retirement effects, we accounted for potential reverse causation of poor subjective well-being on retirement, using an instrumental variables approach by exploiting variations in public pension eligibility due to country and cohort specific retirement ages (early and full entitlement ages).…”

What Explains the Difference in the Effect of Retirement on Health? Evidence From Global Aging Data

“…(), Fonseca et al . (), and Insler () are representative papers. Furthermore, recently review papers have been published on the impact of retirement on health in other fields.…”