Does early retirement affect how long people live? In a new IZA Discussion Paper, Hans Bloemen, Stefan Hochguertel and Jochem Zweerink investigate this question by estimating the impact of early retirement on the probability to die within five years. They analyze a temporary reduction of the retirement age for Dutch civil servants of certain birth cohorts. This “natural experiment” helped establish a causal relationship between time of retirement and time of death. The authors indeed find a strong effect on longevity for men. Early retirement decreases their probability to die within five years by 42.3 percent (or by 2.5 percentage points). There seems to be no such effect for women. As the study found significant effects on dying from a stroke, one plausible mechanism may work through the removal of stress‐related factors associated with demanding work.
These findings imply that pension funds also bear a higher longevity risk if workers are induced to retire early. In the Dutch case, the lives of the 2,348 early retirees were extended by an average of 56 days. This translated into roughly 7 million euros in additional retirement benefits. Another implication may be that the rising early retirement eligibility age in many countries could lead to higher mortality among men.