There seems to be a common belief that if you retire earlier that you will live longer as opposed to working longer. I have read this year after year in articles and financial planning magazines, highlighting the need for us as advisors to promote the idea to our clients. Early in my career I had accepted this as the truth myself given that I felt it made sense from a logical perspective. If you remove the stress of your working life and allow yourself to spend more time doing the things you enjoy, you likely will be healthier, and on average healthy people should live longer than unhealthy ones who are balls of stress. My experience since my early years has taught me that you need to ask more questions, especially in an industry which has been scrutinized for selling products rather than providing advice. The contrarian in me pushed me to take a closer look at whether or not retiring earlier actually helps you to live longer. Here’s what I found.
A paper attributed to the aircraft-maker Boeing said the life expectancy of their employees who retired at 55 was approximately 83 years old. Of their employees who retired at 65, the life expectancy was shockingly only 18 months after retirement. This would seem to be evidence pointing to the fact that retiring earlier has a significant impact on life expectancy, however, I also came across information that showed precisely the opposite.
Epidemiologists at the oil firm Shell carried out a study of past employees in the US which found that mortality was slightly earlier on average for staff who retired at 55 than for those who continued to work until 65. This study would seem to prove the exact opposite of the findings found at Boeing. I have learned over the years that you need to be careful with statistics in taking them at full value. My second major from University was in marketing and I quickly learned that statistics were essentially just arrows in a marketers quiver. They can be manipulated to show whatever you want. In the case of Shell’s study we need to consider that people retire at different ages for many different reasons. There are people who retire early because of poor health which may have an impact on life expectancy. There are people who choose to retire at 55 because of a lifestyle decision. These people tend to be more affluent and in good health. The other consideration to make is that some people who retire at 55 will pass away before 65 but for every person that retires at 65 there is no possible way for them to die before 65 years old. This also distorts the conclusions of the data.
I came across another study performed by a group of economists from the Netherlands who reviewed a situation where Dutch civil servants could temporarily qualify for early retirement. The stipulations were that the employee had to be at least 55 years old and had to have 10 years of continuous service with contributions to the pension fund. Men who had responded to the option were 2.6% less likely to die over the next five years as compared to those who did not retire early. This study echoed similar studies in other countries including the US where they found that seven years of retirement can be as good for health as reducing the chance of getting a serious disease by 20 percent. Positive health effects of retirement have also been found in countries including Israel, Germany, England and other European countries.
Again, I take these findings with a grain of salt. Work can provide purpose and camaraderie. Evidence is mounting which shows that loneliness and social isolation are linked to illness and cognitive decline. The Dutch study I mentioned above also found that half of the mortality reduction associated with retirement is attributable to cardiovascular and digestive system diseases. These diseases are often related to ailments including obesity or habits such as drinking or smoking, as well as reduced exercise. Another study I read concluded that it wasn’t retirement that caused these ailments, but rather reduced physical activity and less social interaction. In other words it wasn’t retirement itself that affects health but what you do in retirement.
From my reading the only thing that ultimately became clear is that there were no set conclusions one way or the other that we can say with absolute certainty regarding life expectancy and the age at which you retire. I know many people who are very healthy working in a business they love in their 70’s and 80’s. I also know many people who retire early who are living great lives as well. My opinion is that it is clearly important to keep moving, to be active not only physically but also mentally. If you are in a job which you have lost your passion for (or never had it in the first place) then retire when you can and move on to something else that you can commit to and be engaged in. If you love your work or your business and feel that if you retired you would end up sitting around and doing nothing, then keep working. I think that it’s safe to say that happy people who are active live longer. There is no set rule that can be followed on when the optimal time to retire is, it’s completely subjective. The only right decision is to not become complacent. If you are unhappy do what you need to do to get happy. Your life, no matter how long it is, will be better for it.
-Grant White, CIM®, CFP®
Grant White is a Portfolio Manager/Investment Advisor at Endeavour Wealth Management with iA Private Wealth Inc, an award-winning office as recognized by the Carson Group. Together with his partners he provides comprehensive wealth management planning for business owners, professionals and individual families.
This information has been prepared by Grant White who is a Portfolio Manager for iA Private Wealth Inc. and does not necessarily reflect the opinion of iA Private Wealth. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Portfolio Manager can open accounts only in the provinces in which they are registered.