First Australian evidence on retirement and wellbeing
A new Life Course Centre Working Paper explores the impact of retirement on different domains of life satisfaction, wellbeing and happiness. It provides the first empirical evidence from Australia on the effects of retirement on personal wellbeing.
The study, conducted by Life Course Centre researchers at The University of Western Australia and Telethon Kids Institute, presents robust evidence that retirement causally improves overall life satisfaction, which is explained by improvements in satisfaction with one’s financial situation, free time, health, and participation in local community activities.
While the positive wellbeing impact of retirement is sizable initially, the paper finds that this fades after the first three years. It also finds that improvements in financial satisfaction upon retirement are only observed for low-income individuals. The wellbeing impact of retirement does not differ by gender, educational, occupational, economic or marital backgrounds.
The paper’s finding on different financial satisfaction by income groups suggests that policies to increase retirement ages would also delay retirement induced wellbeing improvements for many, especially those from low socio-economic backgrounds. The finding that the beneficial impact of retirement on wellbeing is short-lived leads the authors to recommend that governments consider broader support of organised group activities for seniors, and targeted communications about the availability of such activities, to support the wellbeing of retirees, particularly those who have been retired for three years or longer.
This Working Paper is authored by Life Course Centre Research Fellows Dr Ha Nguyen and Francis Mitrou and Chief Investigators Professors Catherine Taylor and Stephen Zubrick.
Read the full paper, ‘Does Retirement Lead to Life Satisfaction? Causal Evidence from Fixed Effect Instrumental Variable Models’, here.