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Retirement Planning > Retirement Investing

Is postponing retirement bad for your health?

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A new study has found that both health and life satisfaction improve in retirement.

According to the study “Does Retirement Improve Health and Life Satisfaction?” from the National Bureau of Economic Research, not only does one’s life satisfaction improve in retirement, physical and mental health also improve — and retirement does not have a noticeable effect on the utilization of health care.

One consideration in undertaking the study was the move toward later retirement ages. Longer life expectancies have resulted in longer retirements, and longer retirements have put pressure on retirement benefits.

“Faced with impending budget shortfalls in entitlement programs, this fact [that retirements last longer] has led policymakers to raise the normal retirement age for collecting some retirement benefits and increased interest in policies that further extend working lives,” the study said. “Such policies are fiscally attractive as longer working lives can both reduce benefits and increase tax revenue.”

However, changes can also bring unexpected results.

“Beyond their direct impact on revenue, they can also affect individual health and well-being, and as a result they may have additional, indirect fiscal and individual impacts,” the authors wrote. “For example, if retirement worsens health and generates increased health care utilization, then policies that delay retirement may further improve Medicare’s finances and make individuals better off. Alternately, 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.”

The study found that the improvement in retirees’ life satisfaction and reported health “are immediate and remain four or more years after retirement.”

Objective measures of health took longer to show up — four or even more years after retirement —“consistent with the view that health is a stock that evolves slowly.”

Because it was able to analyze outcomes a number of years after retirement, the study was able to find “significant improvements in objective health measures that have not been detected in past studies.”

In addition, the study did not find that retirement drove people to use health care to a greater extent, thus determining that increased use of health care was not a factor in retirees’ health gains and thus was not likely to increase costs for public health care systems.


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