Why early retirement may not be good for your health

Freakonomics' Stephen Dubner talks about studies that show that early retirement actually has a considerable downside.

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, Freakonomics.com is the website. We'll see you in a couple of weeks.

Dubner: Thanks for having me, Kai.

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The problem I've always found with older workers is that they somehow feel entitled to do less and make more. In any job I've ever done in my life, the first person to jump out and scream "I've been her X amount of years..." is the lazy one. Also, I keep running into these people in their early to mid 50's who like to brag about how little they did and how much better they are than others because they are collecting some BS pension that they "earned." I ran into a guy last week who told me that "they withheld $9 an hour from his paychecks for his pension..." so he should always get it (He is 53 years old). I looked at him like he was crazy and thought: Your fat lazy ass made enough money per hour to have that much withheld and it's still not enough, even now? And this was in the 1980's? Amazing. Most people like this just drink and drug most of it away in their retirement anyway. I mean, c'mon, explain to me how $3000 plus a month for doing nothing can go so quick!!!

In 2053, when I am old enough to withdraw federal retirement benefits, both social security and Medicare will have been non-existent for decades (Medicare funds are expected to run dry by 2024 and social security by 2033). I have been paying into both of these funds since the beginning of my constant work life - 3 weeks after I turned 16. The exploding costs of health care have created an environment where current retirees are withdrawing huge sums more than they ever contributed to the Federal safety nets, and it takes a full 12 months of my Federal taxes to cover 1 month of payment for a social security recipient.

Meanwhile, I have been charged $22,000 by the Federal government for 4 years of public education that landed me a Bachelor of Science in biochemistry (not exactly a fluff degree if I do say so myself). As of now, my interest rates will increase to nearly 7% annually come July. The Federal government gives in less than 2 years to a social security recipient with absolutely no stipulations the same amount of money that I received in 4 (while still working part-time and paying taxes) with a 7% interest rate slapped on top, but I will be contributing to the market for 50+ years to come.

I understand that the present and near-future retirees have planned the last quarter century of their lives expecting to be taken care of by the Federal government, and by no means do I think we should leave them high and dry. However, as someone who will be paying 15% of my monthly income for the next 10 years to repay my chance to compete in the current global market, it is really hard not to be frustrated by what I see as the Federal government subsidizing 20+ years for people to "essentially do nothing", to borrow the phrase from Levitt.

I'm sure there are many retirees that donate their time and resources to their communities and help stimulate the market to an extent, but I must say that my grandparents, other older relatives, and all of their friends absolutely do not fall into that category. Even if some retirees do good with their surplus of free time and energy, there is no expectation for it and no penalty if they instead choose to watch television for 25 years on the government's dime. I, on the other hand, will never have that luxury. I can't even afford television, let alone not having a private income to repay the Federal government for my 4 years of hard work.

Heather hit the nail on the head! Correlation does not equal causation. It takes a LOT of money to retire comfortably so most people wind up working until their health fails or they loose their job. Many people retire because they don't have any other options.

When Stephen Dubner and his colleague researched this piece, did they bother to confirm that the early retirees had the same life expectancy as the people who continued working? Do early retirees have access to quality healthcare? Access to healthcare is a serious challenge for early retirees in the US because early retirees are often not old enough to qualify for Medicare and it may be difficult or expensive to get health insurance once you are no longer employed. If you are getting Social Security Disability you are automatically eligible for Medicare, but it wouldn't be fair to compare the life expectancy of people who retire early due to a disability with those who keep working and are not disabled.

Also, I know people who are working in jobs that they hate because they need the money. You could make an argument that work is reducing their quality of life.

The bottom line is that we should be very careful not to jump to conclusions about the quality of life or life expectancy of people who retire early vs. those who continue working. There are many complex variables that need to be considered in drawing any conclusions.

The large majority of retired people I know are not sitting on their couches watching reality TV and hoping for death to come save them from misery. They are volunteering in various community functions, joining boards (often more than one), exercising more, spending time with grandkids, starting a new business venture, going to church, taking new classes, and many other activities that could go on and on. These people may not make up the representative sample of retirees in the US, but they also aren't quite the depressed drag on society that Dubner seems to want to suggest. People retire for all sorts of reasons, and sometimes this opens up vast new opportunities to be "productive" in life.

Dubner included a clip from a Swiss academic named Zweimuller who studied early retirement's effect on some Austrian blue collar workers. Don't Austrian blue collar workers smoke, drink a lot of beer and enjoy a robust and satisfying relationship with potatoes and pork? Would the story be less a clear cheer for working into dotage if the worker in question were a white collar, nonsmoking, daily gym attendee who liked green vegetables, never drank more than a glass of wine and preferred salmon over pork? This report sounded to me suspiciously like urging people whose finances have been maimed by Wall Street, the banks and a certain insurance company to take it all philosophically and work much, much longer and retire much, much later--it'll be good for them, after all!

As a member of that pre-retirement cohort, it seems to me that basic economics would highly value older workers who have more experience, education and relationships than any cohort in history. They (we?) are a hugely under-valued resource of human capital. Shouldn't they be commanding elevated wages? Please comment on this apparent "freak" of economics.

I find the idea of retirement a fascinating philosophical idea. Why do people who are the most "powerful" one year, give it all away the next? I am particularly curious about jobs that are "callings", such as minister, physician, scientist, etc.

I find various answers:
A. There is a cultural/religious "promise" -- perhaps based on historic realities
B. People want to do something new -- new challenges
C. Some, have the ability to stop working for a living and take the culturally respected opportunity.

This discussion appears to confuse correlation with causation - and in fact, the causation may well be the other way around. Many people "choose" to retire early because their health does not permit them to work to full retirement age. If their health is already bad when they retire, there will surely be a mortality effect.

Heather, exactly what I was thinking. Dubner hit a new low with this one.

Maybe you're looking at retirement the wrong way. I'm sure there are many retirees like me who have no regrets about retiring early, It's a simple, but satisfying life. This is a time for reflection and sharing experiences with the younger generations. And, being connected to the world digitally makes a big difference. No one knows you're a dog (or a white-haired elder) on the internet. So, sharing our experiences and life lessons online gives us old-timers a fair platform.

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