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Working paper

Healthy, Wealthy and Working: Retirement Decisions of Older New Zealanders (WP 10/02)

Issue date: 
Tuesday, 16 November 2010
Status: 
Current
View point: 
Document Date: 
Publication category: 
JEL classification: 
D19 - Household Behavior and Family Economics: Other
D31 - Personal Income, Wealth, and Their Distributions
J22 - Time Allocation and Labor Supply
J26 - Retirement; Retirement Policies

Formats and related files

This study analyses the influence of health and wealth on the decision to participate in the labour force amongst older New Zealanders, aged 55 to 70.

Abstract

Health status is an important element in the decision to continue working or retire among older workers. Given the demographic projections for the next four decades, there will be increasing opportunities for older workers to remain in the workforce. However, an individual’s decision is likely to be influenced by both their health status and their accumulated wealth. This study analyses the influence of health and wealth on the decision to participate in the labour force amongst older New Zealanders, aged 55 to 70. It is based on the first wave of data collected in a longitudinal survey of Health, Work and Retirement conducted by researchers at Massey University.

The study employs a range of measures of health including the results from the international Short Form (SF36), self-reported health status and the prevalence of chronic illness. Regardless of the measures tested, a significant reduction in labour force participation is associated with poorer health status. It is widely recognised that health status itself may partly be determined by labour market characteristics. Attempts to deal with this statistically were not successful. Perhaps surprisingly, wealth did not appear to be strongly related to the decision to retire. A marked fall in participation is associated with the receipt of New Zealand Superannuation at age 65, arguably masking the effect of privately held forms of retirement wealth. The paper reports associations between health, wealth and retirement which do not necessarily constitute evidence of causality.

This Working Paper is available in Adobe PDF and HTML. Using PDF Files

Acknowledgements

The authors acknowledge the support and guidance of Fiona Alpass and Jack Noone of the Department of Psychology, Massey University in making available the data from Wave 1 of the Health, Work and Retirement Longitudinal Survey. Throughout the study they willingly answered questions about the data. Dean Hyslop of Victoria University provided guidance on the use of econometric models, and the authors benefited from discussions with and helpful suggestions made by Heather Holt and Katy Henderson of the Treasury. Judith Davey of the Institute of Policy Studies, Des O’Dea from the Wellington School of Medicine, Adam Tipper from the Ministry of Social Development and David Law and Tony Burton of the Treasury made helpful suggestions on a draft. Kathy Anderson of Vanderbilt University assisted with access to earlier papers.

Disclaimer

The views, opinions, findings and conclusions or recommendations expressed in this Working Paper are strictly those of the authors. Theydo not necessarily reflect the views of the New Zealand Treasury. The Treasury takes no responsibility for any errors or omissions in, or for the correctness of, the information contained in these Working Papers. The paper is presented not as policy, but with a view to inform and stimulate wider debate.

 

Last updated: 
Tuesday, 27 October 2015