Ready for today’s retirement pop quiz?
Which of the following statements do you think is true:
- Do men who are already healthy decide to work longer and retire later?
- Or do they become healthier because they work longer?
This chicken-and-egg question goes to the heart of a longstanding debate in the retirement planning community: Can soon-to-be-retirees improve their health and longevity by continuing to work and postponing retirement?
Answering this question has been close to impossible because it’s so difficult to ascertain what is cause and what is effect. While statisticians have known for some time that individuals who work longer and postpone retirement tend to be healthier, they also know that correlation is not causation.
A recent study from Boston College’s Center for Retirement Research was able to at least partially solve this riddle. They found that working longer actually leads to a longer life expectancy.
The study was conducted by Alice Zulkarnain, a research economist with the CPB Netherlands Bureau for Economic Policy Analysis, and Matthew Rutledge, an economics professor at Boston College. They were able to disentangle cause and effect by analyzing the impact of a tax policy change in the Netherlands in the early aughts.
That policy, which was in effect from 2009 to 2013, provided substantial tax incentives to encourage people to continue working after age 62. The policy had the intended effect, as the proportion of individuals in this age cohort who were employed went up significantly. This enabled the researchers to compare this cohort’s subsequent mortality rate with that of the immediately-preceding one that contained slightly older individuals.
Sure enough, the cohort that worked longer had a lower mortality rate. The researchers made sure that this result couldn’t be explained by any other factors that prior research has found to be correlated with mortality.
Since many of the people who turned 62 between 2009 and 2013 are still alive, it’s impossible to know whether the reduced mortality rate the researchers documented is long-lasting or merely temporary. But if it is longer lasting, the researchers calculate that those who continue working could extend their life expectancy by as much as two years.
This recent study dovetails nicely with another to which I devoted a Retirement Weekly column several years ago. That earlier study focused on what happened to mortality rates after Social Security was changed in the late 1950s and early 1960s to allow individuals to take early retirement. The authors, Maria Fitzpatrick of Cornell University and Timothy Moore of the University of Melbourne in Australia, found a distinct increase in mortality among those who took advantage of the change and retired at age 62.
It is interesting to note that both the earlier and more recent study found that accelerating or delaying retirement had a far greater impact on men than women. We can only speculate as to why that would be, but one possibility is that, after retiring, men engage in unhealthier behaviors than women.
For example, some studies have found that, upon retirement, men but not women on average become more sedentary, increase their alcohol and tobacco use, and decrease their social interactions. All of those behaviors are correlated with reduced health and longevity.
More research is obviously needed. But we already know more than enough to convince us of the importance of engaging in healthy behaviors, regardless of our age. These new studies at least hint that this is especially important when we decide to retire.
Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at email@example.com