Retirement Kills: a New Marketplace Podcast

Are you bummed out that you might have to postpone retirement for financial reasons?

Well, there may be a silver lining: it looks like retirement may be bad for your health. That’s the topic of our latest Freakonomics Radio on Marketplace podcast, “Retirement Kills.” (You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below.)

The Great Recession has put a lot of retirement plans on hold, often at the behest of governments who can’t afford to pay pensions. Germany, the U.K., and France have all upped their retirement ages.  And the U.S. is seeing a lot more older workers as well. Lisa Boily of the Bureau of Labor Statistics tells us that people 55 and older are expected to represent 25 percent of the labor force by 2020.

Part of this is simple demographics — the graying of the baby boom — but Americans are also working longer. In fact, the share of workers over 65 is the highest it’s been in more than 50 years:

This trend may depress you, but consider the upside. The economist Josef Zweimuller, at the University of Zurich, recently co-authored a study which found that early retirement, as much as we may crave it, seems to be bad for our health:

“[A]mong blue-collar workers, we see that workers who retire earlier have a higher mortality rates and these effects are pretty large.”

The study showed that for every extra year of early retirement, workers lost about two months of life expectancy. Nor is this the first study to show a strong relationship between early retirement and earlier death.

There’s much more to hear on the subject in the podcast, including observations from University of Florida psychologist Mo Wang, who studies retirement, and Steve Levitt, who’s got his own plan to retire and keep working at the same time.

Audio Transcript

Kai Ryssdal: Time now for a little Freakonomics Radio. It's that moment every couple of weeks where we talk with Stephen Dubner, the co-author of the books and blog of the same name -- it is the hidden side o' everything. Welcome back, Dubner.

Stephen Dubner: Hey Kai, thank you. This time, I'm curious -- don't take this the wrong way, but you're not thinking about retiring anytime soon, are you?

Ryssdal: No. Do you know something I don't know?

Dubner: I do not. But since you're not, that puts you in good company. The Great Recession have put a lot of retirement plans on hold for a long time -- often at the behest of governments who can't afford to pay pensions. Germany, the U.K., France -- they've upped their retirement ages. And we're seeing a lot more older workers in the U.S. as well.

Here's Lisa Boily from the Bureau of Labor Statistics.

Lisa Boily: OK, in 2000, 55 and older, that group was 13 percent of the labor force. In 2010, that group was 20 percent of the labor force. By 2020, our projections show that that group will represent 25 percent of the labor force.

Ryssdal: My gut tells me that my initial inclination on this is wrong -- that's just people getting older, right? Isn't that the deal?

Dubner: Demographics are real; there are more older people. But people also are working longer. So the share of workers over 65 in this country is the highest it's been in more than 50 years.

Ryssdal: So we're going to have to work until not 60s, but mid-70s sometime, right?

Dubner: Well look, it may sound terrible but Kai, I'm happy to say, there's a hidden side, a little silver lining here to consider. So the economist Josef Zweimuller, at the University of Zurich, recently did a study that looked at two fairly identical groups of blue-collar workers in Austria. One group that got early retirement up to three and a half years earlier than the other, and what Zweimuller found is that early retirement -- as much as we may crave -- actually has a considerable downside.

Josef Zweimuller: I mean actually what we find in our study is that among blue-collar workers, we see that workers who retire earlier have higher mortality rates. And these effects are pretty large.

Ryssdal: 'Higher mortality rates' -- they die, the people who took the early retirement?

Dubner: Correct. The study showed that for every extra year of early retirement, you lose about two months of life expectancy. And I should say, this is not the first study to show there's a fairly strong relationship between early retirement and earlier death.

Ryssdal: What we do we know about the causes of these deaths? Is it heart attack, what is it?

Dubner: A lot of them cardiovascular, likely due to things like more smoking and drinking, worse diet, not enough exercise. But there's also evidence to show it goes beyond the physical, that working longer is tied to better mental health as well.

Here's Mo Wang, he's a psychologist at the University of Florida who studies retirement.

Mo Wang: Working actually gives you a way to structure life and that's very important. Usually it's interesting you see people travel right after they retire, but then after like one or two years, people just sit at home watching TV.

Dubner: So this raises a bit of an existential quandary, right? Life expectancy at birth in the U.S. has doubled over the past century. Miraculous. Which means that we've gained more and more years -- potentially -- of retirement. But we're still figuring out what to do with all those years.

Here's my Freakonomics friend and co-author Steve Levitt -- as you know, he's an economist at the University of Chicago.

Steven Levitt: So now we've created this artificial, sort of absurdly long chunk of years -- for many people 25 or 30 years -- where you've got nothing to do, but the government essentially pays you to do nothing. So I think retirement as we have it today is crazy.

Ryssdal: Says the academic who sits around and thinks all day.

Dubner: And says the economist who wants to squeeze more productivity out of us.

Ryssdal: Right, he wants us to work longer and harder?

Dubner: Right, but here's the thing: it may be for our own good. If early retirement leads to worse health outcomes, you start to see the virtue of working longer. Of course, it all depends on how you define "work" -- and if you can kind of have your cake and eat it too. That is exactly the way Steve Levitt, by the way, is planning his retirement.

Levitt: So my second career will be to aspire to be a professional golfer. So it's not something I'll ever actually attain, but I'm going to call my full-time golfing 'work.'

Ryssdal: Nice work if you can get it. Stephen Dubner, is the website. We'll see you in a couple of weeks.

Dubner: Thanks for having me, Kai.

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  1. Mike B says:

    It’s always been clear that people who find themselves with little to drive them after retirement are destined for an early grave. I am reminded of a crossing guard and auxiliary policeman in my town that was still on the job at the age of 90 when, due to various considerations, he was forced to retire after 30 some years in this secondary career. Needless to say he died after only a few weeks. And of course we all remember Andy Rooney that dropped dead literally the week after he left his post at 60 Minutes.

    I wouldn’t be surprised if this even includes people with the resources to stay active in various leisure activities when done only to fill time or out of some sense of obligation. The key to a longer and healthy life is a strong sense of personal value and passion for living. They can be in ones existing career or in a career one had always wanted to peruse or even in a hobby that one cares deeply for.

    Well-loved. Like or Dislike: Thumb up 7 Thumb down 1
    • Voice of Reason says:

      And it’s possible that Alzheimer’s play due to this. When you’re spending all of your days sitting on the beach and watching TV you’re not working your mind, thus you accelerate the onset of the disease. When you’re actively using your mind, its onset is delayed.

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  2. Mayuresh Gaikwad says:

    Correlation, Causation and all that jazz

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    • csdx says:

      My guess as to a potential causation mechanism:
      Having a job enforces a healthier lifestyle. A (blue collar) worker might otherwise get more exercise in their job than they would voluantarily do in retirment. Also being at work means less time for unhealthy habits, like smoking or drinking.

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  3. Andy C. says:

    Perhaps health is playing a role in the decision to retire. This would, of course, create a correlation in early retirement and earlier death as shown in this result.

    Well-loved. Like or Dislike: Thumb up 35 Thumb down 0
    • Crimfan says:

      Indeed, the decision to retire is endogenous. People often retire because they have to, not necessarily because they want to. This is particularly true for blue collar workers, who may be physically unable to continue working in their job.

      Of course, I don’t think our social institutions have really caught up with the notion of working to later ages. The fact that there’s no good way to “downshift” a career means that many people retire when they could make contributions at a reduced rate. In a lot of careers, someone in their 60s might well have a lot to add—training newer employees, taking on administrative tasks, etc.—but may not be able to keep up a full schedule. However, there are no good ways, in general, to downshift, so you often have highly paid employees taking up a slot in which their productivity isn’t what it might be.

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  4. Dan says:

    Mr. Dubner, did you even read the study???

    The authors say,
    “suggesting that the negative association between retirement age and mortality in the raw data is entirely due to negative health selection”

    What they mean is that people retire early **because** their health is poor, rather than that early retirement causes poor health.

    Mr. Dubner, isn’t a correction in order?

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    • Yes (I read the paper). And no (a correction is not in order). Take a look again at the paper (linked in post above). Specifically, these sections:

      To solve the problem of negative health selection into retirement we take advantage of a major change to the unemployment insurance system in Austria.2 This policy change allowed older workers in eligible regions to retire up to 3.5 years earlier than comparable workers in non-eligible regions. The programme generated substantial variation in the actual retirement age, which, arguably, was driven only by financial incentives and not driven by differences in individuals’ health status. This lets us examine the causal impact of early retirement on mortality using instrumental variable (IV) techniques. Moreover, the comparison between ordinary least squares (OLS) and IV estimates allows us to assess the extent of health-driven selection into early retirement. …

      A second channel suggests that changes in health-related behaviours associated with smoking, drinking, an unhealthy diet, and little physical exercise may cause premature death following early retirement. Our results strongly support this hypothesis. Complementary data from cause-of-death statistics reveal that excess mortality is concentrated on three causes of deaths:

      (i) ischemic heart diseases (mostly heart attacks),

      (ii) diseases related to excessive alcohol consumption, and

      (iii) vehicle injuries.

      These three causes of death account for 78% of the causal retirement effect (while accounting for only 24% of all deaths in the sample). We calculate that 32.4% of the causal retirement effect can be directly attributed to smoking and excessive alcohol consumption.

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      • Dan says:

        Thank you, Mr. Dubner.

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      • Tom Boutell says:

        Thanks for addressing that.

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      • Erik Dallas says:

        See 03/29/2012 Freakonomics blog on same study by economist, Josef Zweimuller at the University of Zurich, where these details are discussed.

        Anecdotal evidence and research would point to the key to not increasing mortality in retirement is having a reason to get up in the morning and participate in society.

        The Zweimuller article from the University of Zurich is focused on the EU flavor of retirement and the EU’s socialized retirement systems that provide respectable middle class pension annuity. For the US the retirement system has essentially collapsed into a welfare benefit. Social Security is a welfare benefit not a middle class benefit. Few companies are still providing a traditional final average pay pension plan, and 401(k) contributions are deficient. The risk most retiring US workers will face is not premature death but the longevity risk–running out of retirement funds. Depending on longevity, asset return and inflation, comfortable retirees usually requires savings the equivalent of 10 to 20 salary. However, most surveys indicate that the average 401(k) balances of 60+ year olds are around $100,000 or in most cases less than two times earnings. This is not retirement planning. This is poverty. In the US our retirement system is designed for those who smoke and drink excessively and die within two years of retirement. Probably what we need to do is fix retirement saving and our pension system, not smoke and drink to match our lack of savings.

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  5. PaulD says:

    This post is sort of the converse of the old Woody Allen joke: “The food at this restaurant is terrible — and in such small portions.”

    “This job is terrible — but you get to do it until you’re 90!”

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  6. Jan Cullinane says:

    If retirement doesn’t kill you, it might make you sick. “Leisure sickness,” is a term coined by Dutch psychologist Ad Vingerhoets of Tilburg University. In a study of almost 2,000 people, about three percent of high achieving respondents identified themselves as suffering from symptoms of illness when they didn’t have much to do, were on vacation, or were no longer working at high-pressure jobs.

    Jan Cullinane
    The New Retirement: The Ultimate Guide to the Rest of Your Life
    The Single Woman’s Guide to Retirement

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  7. W Peters says:

    A major reason why people retire is that they have health issues and have to retire early — the number is about 8%. Hence, the average life expectanc of a retirement group will by definition be worse.

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  8. Arthur says:

    I work as a retirement professional (actuary), and while I do not doubt extra leisure time may play a role in increased mortality of early retirees, at least part of this phenomon among blue collar workers is selection. Many blue collar workers choose to retiree because they can no longer physically do their job. You clearly have less healthy (on average) choosing to retire.

    I think it is misleading not to at least factor in what could be the primary reason for the discrepancy in life expectancies.

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    • csdx says:

      I believe your concerns were already expressed by Dan in a previous comment and addressed in Dubner’s reply as well.

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