Linking Retirement Age to Life Expectancy Effects on Healthy Life Expectancy Before and After Retirement

29 Pages Posted: 26 Sep 2015

See all articles by Anja De Waegenaere

Anja De Waegenaere

Tilburg University - Department of Econometrics & OR, Netspar, and CentER

Ying Yang

University of Rhode Island - Department of Economics; University of Rhode Island - College of Business Administration

Bertrand Melenberg

Tilburg University - Center for Economic Research (CentER)

Date Written: September 1, 2014

Abstract

This paper considers the effects of a policy that links retirement age to life expectancy. We focus on the effects on healthy life expectancy before and after retirement, and on the likelihood of being in good health at retirement age. To investigate these effects, we use a stochastic projection model that allows to jointly model and forecast health and mortality, and to quantify the corresponding uncertainties. In the best-estimate projection, linking retirement age to life expectancy would lead to an increase in retirement age of about 9 months per decade. Even though younger cohorts face significantly higher retirement ages than older cohorts, the likelihood of being in good health at retirement age is higher for younger cohorts. The effects of the policy on healthy life expectancy before and after retirement, however, are somewhat more mixed. Whereas best estimate projections suggest that healthy life expectancy before and after retirement would increase or remain constant over time, there is considerable uncertainty regarding the actual development. The bounds of the forecast intervals correspond to significant increases in time spent in poor health before retirement age, and decreases in time spent in good health after retirement age.

Keywords: Retirement age policy, (healthy) life expectancy, health status at retirement age

JEL Classification: C32, E17, J26, I18, J14

Suggested Citation

De Waegenaere, Anja M.B. and Yang, Ying and Melenberg, Bertrand, Linking Retirement Age to Life Expectancy Effects on Healthy Life Expectancy Before and After Retirement (September 1, 2014). Available at SSRN: https://ssrn.com/abstract=2663085 or http://dx.doi.org/10.2139/ssrn.2663085

Anja M.B. De Waegenaere

Tilburg University - Department of Econometrics & OR, Netspar, and CentER ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Ying Yang (Contact Author)

University of Rhode Island - Department of Economics ( email )

Chaffe Hall
10 Chaffe Road #3
Kingston, RI 02881
United States
401-874-5896 (Phone)

University of Rhode Island - College of Business Administration ( email )

Kingston, RI 02881
United States

Bertrand Melenberg

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 2730 (Phone)

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