Tuesday, September 17, 2013

Relax. Early retirement won't kill you

Even if financially it's not so good

It’s known as “quit and die” - the belief that men who retire early die sooner. And it is said to be backed up by evidence.

In one often-cited but rarely-seen study the Shell Corporation is said to found that its employees who retired at 55 were nearly twice as likely to die in the next decade as those who kept working.

But evidence of a solid link has been hard to find, in part because ill health is one of the reasons people retire early.

Now Australia’s Centre of Excellence in Population Aging Research believes its cracked the puzzle.

In new research released Tuesday it says there is no such effect. Men who retire early are no more likely to die at any age than those who stay working.

The lead Australian author John Piggott had to get around what he called “confounding influences”.

“Some people retire early because they are ill. Six months later they die. But they didn’t die because they retired early,” he says.

“Some people retire early because their firm has shut down. They are demoralised and depressed, they face financial stress and their social networks break down. But they didn’t necessarily die early because they retired early, it might have been because of the way it happened.”

Professor Piggott and researchers from Norway took advantage of an usual “natural experiment”...

In 1989 Norway introduced an early retirement program that covered some firms and not others. Around half its private sector employers steadily cut the minimum age for access to retirement benefits from 67 to 62. The others did not. Many years on the data shows no statistically significant difference in death rates up to the age of 70.

“It means you can leave work without worrying about losing years; do whatever works for you,” Professor Piggott says.

For the government the implications are that it too needn’t worry about hastening death by encouraging people to work longer.

“If it were firmly established that working longer led to an earlier death policy makers would feel kind of mean,” he says.

Professor Piggott supports delaying the age at which Australians can gain access to tax-free superannuation, but not because of any concern about lifespan.

“Many people retire at 60, get $400,000 tax-free and then three years down the track have only $160,000 and need to get back into the workforce. That’s extraordinarily difficult at age 63, and they can’t get the pension. I would lift the age for access to tax-free super in line with increases in the age for access to the pension,” he says.

Professor Piggott served on the Henry Tax Review.

In The Sydney Morning Herald

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