Does retirement improve health and life satisfaction?

Health Econ. 2018 Dec;27(12):2067-2086. doi: 10.1002/hec.3821. Epub 2018 Aug 23.


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.

Keywords: health; instrumental variables; life satisfaction; retirement.

MeSH terms

  • Aged
  • Eligibility Determination / methods
  • Female
  • Humans
  • Male
  • Middle Aged
  • Models, Economic
  • Patient Acceptance of Health Care
  • Pensions*
  • Personal Satisfaction*
  • Retirement / statistics & numerical data*
  • Social Security / statistics & numerical data*
  • Surveys and Questionnaires
  • United States