Work, Health, and Retirement

Before Retirement

Retirement as it is now understood—as pensioned leisure—is not widely available to workers until national governments can organize social security programs and tax incentives that marshal replacement income as an inducement to leave the labor force. In the United States, this had occurred by the mid-20th century. Prior to this time, people who could not self-finance their retirements were prone to work until their health no longer permitted such activity. In the modern welfare state, workers can now exit the labor force voluntarily at ages far in advance of likely disability or death.

Yet health still limits the productive careers of some workers when they find themselves unable to perform on the job. Approximately 20% to 30% of retirements involve ill health or disability as the primary reason for retirement. Moreover, health is probably implicated in an even greater share of job exits; for example, when employers discourage older workers who are believed to lack productive capacity. Laws against age discrimination have largely eliminated mandatory retirement on the basis of age, yet some workers still face age limits on employment because certain occupations are legally deemed to be too strenuous or cognitively demanding past a certain age (e.g., commercial airline pilots, police officers, firefighters).

Health and the means to maintain it figure into retirement in other ways. Some workers are motivated to retire out of a desire to preserve their health or enjoy retirement “while they can.” The timing of retirement can also hinge on the continued availability of employer-sponsored health insurance prior to the Medicare eligibility age of 65 years. Because working couples collaborate in timing their exits, the health issues of one spouse can influence the retirement decision of the other spouse.

Even as impaired health—actual or anticipated—can limit work careers, sustained good health can extend working life in a labor market that includes more service, retail, and part-time jobs. Although the average American worker retires prior to 65 years of age, substantial numbers still work into later life. At 70 to 74 years of age, nearly 20% of men and more than 10% of women are still in the labor force on a part-time or full-time basis.

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