Research
Job Market Paper
Retirement Bliss or Regret? Unraveling the Impact on Life Satisfaction
Abstract: Retirement marks a significant life transition that embodies both anticipation and uncertainty and impacts individuals’ overall well-being and life satisfaction. While some embrace retirement as an opportunity for leisure and personal fulfillment, others may struggle with the loss of work-related identity and routine. Understanding how retirement influences quality of life is crucial for informed decision making and policy development. Our study, utilizing a rich longitudinal dataset of Canadian residents aged 45 to 85 years, aims to fill gaps in existing research by examining various dimensions of retirement and their effects on life satisfaction. Through rigorous empirical analyses that account for potential endogeneity issues, we find that retirement, whether partial or complete, consistently enhances overall well-being, but whether one transitions into complete retirement from no retirement or partial retirement matters, as does whether retirement is voluntary or involuntary. Specifically, only the transition into complete retirement from no retirement and only voluntary retirement contribute to greater life satisfaction. While life satisfaction generally increases with age, we observe a nuanced effect of retirement duration, suggesting a prolonged period of positive retirement benefits before any dissipation. Furthermore, our analysis uncovers some impact heterogeneity based on gender, level of education, and reason(s) for retiring, with males and less educated individuals experiencing larger increases in life satisfaction upon retirement and push-type reasons (i.e., circumstances) countering the positive effects of pull-type reasons (i.e., incentives). Our findings underscore the importance of considering diverse aspects of retirement in shaping individuals’ post-employment experiences and highlight the need for tailored interventions and support mechanisms to optimize retirement outcomes.
Publication
Effect of Retirement on Life Satisfaction in Canada: Evidence from the 2008–2009 Canadian Community Health Survey–Healthy
(with Ida Ferrara and Sadia M. Malik )
Abstract: Retirement represents a major transition in the lives of the older population, potentially affecting well-being through lifestyle, emotional, and financial changes that accompany the transition. In this study, we empirically investigate the effect of retirement on life satisfaction in Canada, using data from the 2008-2009 Canadian Community Health Survey – Healthy Ageing. Identifying the effect of retirement on life satisfaction is inherently difficult because of self-selection, reverse causality, and unobserved individual-specific heterogeneity that may impact both life satisfaction and the decision to retire. To address these concerns, we explore the use of the age thresholds from the Old Age Security and the Canada/Quebec Pension Plans as instruments in the decision to retire. Regardless of whether we rely on subjective or objective measures of retirement, we find that retirement has a positive and significant effect on the life satisfaction of the elderly population in Canada. This effect remains significant after we control for age, gender, marital status, educational background, household income, race, immigrant status, and province-level fixed effects.
Working Paper
Retiring to Thrive? Investigating the Health Impact of Embracing the Golden Years
(with Ida Ferrara and Sadia M. Malik )
Abstract: Retirement is a significant milestone that profoundly impacts physical and mental well-being. In Canada, where individuals predominantly base retirement decisions on personal preference, there is a notable lack of research exploring these impacts. This study aims to address this gap by analyzing the extensive, longitudinal data from the Canadian Longitudinal Study on Aging (CLSA), which tracks nearly 50,000 older adults from 2011 through three successive rounds of data collection. Employing a suite of analytical methods, including fixed effect, first difference, instrumental fixed effect, instrumental first difference effect and regression discontinuity design models, our research seeks to unravel the effects of retirement on health outcomes. These methods are chosen to circumvent the limitations of reverse causality and self-selection bias that have hampered previous studies. The anticipated findings are expected to make a significant contribution to discussions on retirement policies in Canada, clarifying the interaction between incentivized retirement ages and individual autonomy in retirement planning.