THE MORTALITY EFFECTS OF RETIREMENT: EVIDENCE FROM …

THE MORTALITY EFFECTS OF RETIREMENT: EVIDENCE FROM SOCIAL SECURITY ELIGIBILITY AT AGE 62

Maria D. Fitzpatrick and Timothy J. Moore

CRR WP 2016-7 August 2016

Center for Retirement Research at Boston College Hovey House

140 Commonwealth Ave Chestnut Hill, MA 02467 Tel: 617-552-1762 Fax: 617-552-0191



Maria D. Fitzpatrick is an assistant professor of policy and management at Cornell University. Timothy J. Moore is an assistant professor of economics at George Washington University. The research reported herein was performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement Research Consortium. The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, Cornell University, the George Washington University, or Boston College. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report. Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.

? 2016, Maria D. Fitzpatrick and Timothy J. Moore. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including ? notice, is given to the source.

About the Steven H. Sandell Grant Program

This paper received funding from the Steven H. Sandell Grant Program for Junior Scholars in Retirement Research. Established in 1999, the Sandell program's purpose is to promote research on retirement issues by scholars in a wide variety of disciplines, including actuarial science, demography, economics, finance, gerontology, political science, psychology, public administration, public policy, sociology, social work, and statistics. The program is funded through a grant from the Social Security Administration (SSA). For more information on the Sandell program, please visit our website at: , send e-mail to crr@bc.edu, or call (617) 5521762.

About the Center for Retirement Research

The Center for Retirement Research at Boston College, part of a consortium that includes parallel centers at the University of Michigan and the National Bureau of Economic Research, was established in 1998 through a grant from the Social Security Administration. The Center's mission is to produce first-class research and forge a strong link between the academic community and decision-makers in the public and private sectors around an issue of critical importance to the nation's future. To achieve this mission, the Center sponsors a wide variety of research projects, transmits new findings to a broad audience, trains new scholars, and broadens access to valuable data sources.

Center for Retirement Research at Boston College Hovey House

140 Commonwealth Ave Chestnut Hill, MA 02467 Tel: 617-552-1762 Fax: 617-552-0191



Affiliated Institutions: The Brookings Institution

Syracuse University Urban Institute

Key Findings and Policy Implications This paper examines the link between retirement and health by examining whether

mortality changes discontinuously at the Social Security eligibility threshold at age 62. It uses data from the National Center for Health Statistics' Multiple Cause of Death, the Health and Retirement Study, and the Social Security Master Beneficiary Records and Numident Files. Critical components of the analysis include the regression discontinuity framework and the use of detailed objective health outcomes. Key limitations of our estimates are of the effects on mortality net of any anticipatory changes in health investments, the difficulty in knowing whether the results extend to retirement at ages other than 62, and a lack of available data on other objective health outcomes.

The paper found that: ? Many individuals decide to claim Social Security as soon as they can after turning age 62. ? There is a coincident increase in mortality soon after turning 62. ? The mortality increase is robust for males but not for females. ? The increase in mortality seems to be more connected to stopping work than to claiming Social Security itself.

The policy implications of the findings are: ? There may be an increase in mortality risks when people stop work. ? More research may shed light on the reasons for this and the ways these elevated risks could be reduced. ? Initiatives and policies that assist people through the transition to retirement may have health benefits.

Abstract Social Security eligibility begins at age 62, and approximately one third of Americans

immediately claim benefits upon reaching that age. We study the link between retirement and health by examining whether mortality changes discontinuously at this threshold. Using mortality data that covers the entire U.S. population and includes exact dates of birth and death, we document a robust two percent increase in overall male mortality immediately after age 62. The rise in mortality is closely connected to changes in labor force participation, implying that mortality increases by approximately 20 percent among those who stop working because Social Security is available.

1. Introduction There is enormous interest in the effect of retirement on health, especially given the aging

of the population and reforms to retirement policies underway in the United States and other developed countries. However, the interdependence between health outcomes and retirement status, which commonly leads individuals in poorer health to retire earlier, means that it is difficult to disentangle this relationship. A large literature attempts to identify this relationship using public policies and firm-specific rules that affect retirement as exogenous sources of variation. Some researchers use longstanding pension rules in the U.S. and Europe that affect the likelihood of retirement (e.g., Charles, 2004; Bound and Waidmann, 2007; Neuman, 2008; Coe and Zamarro, 2011), while others use the introduction of early retirement incentives (e.g., Coe and Lindeboom, 2008; Hernaes et al., 2013) or changes to labor market policies (e.g., Kuhn, Wuellrich and Zweim?ller, 2010). Despite the wide range of settings and variety of empirical strategies, these studies have failed to produce clear and consistent findings as to how retirement affects health.

We contribute to this literature by examining how mortality changes in the U.S. at age 62, when most individuals become eligible for Social Security Retirement and Survivors Insurance ("Social Security"). Many choose to claim Social Security immediately upon reaching 62. Figure 1 shows the fraction of males and females ever having claimed Social Security, constructed by age (in months) using a one percent extract of Social Security administrative data for 1921-1948 birth cohorts born.1 The rise in new claims at age 62 is striking: 31 percent first claim upon turning 62, with males and females claim at similar rates. This leads to other discontinuous changes; as we show below, approximately one-tenth of males retire in the month they turn 62.

We show that there is a discontinuous change in the age-mortality relationship at age 62. We identify this using a regression discontinuity (RD) design and restricted-use versions of the National Center for Health Statistics' Multiple Cause of Death (MCOD) data. MCOD data are compiled from death certificates and include exact dates of birth and death. We show that aggregate mortality increases by 1.5 percent in the month individuals turn 62. This is driven by a two percent increase in male mortality that is statistically significant, robust to a wide variety of specification choices, and substantially greater than at nearby ages with known policy discontinuities (e.g., ages 60 and 65). We estimate a one percent increase in mortality for females in the month they turn 62; however; it is neither robust nor larger than mortality estimates at nearby ages.

1 All types of Social Security claims are included in this figure. We explain more about these data in the next section.

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