How Variations in Health Status Influence Retirement Decisions?

Retirement date decisions are crucial for seniors. It is influenced by financial situation,health status, family conditions, planning for the rest of the life, etc. While some literatureemphasizes economic well-being as a critical determinant, recent research suggests thathealth status is a more significant factor in retirement decisions. This thesis explores howvariations in health status influence retirement decisions using panel data from the Healthand Retirement Study (HRS). Building on the extensive use of HRS data in previousstudies, this research expands their approaches and methodologies.Both subjective and objective health variables are utilized to address the potentialjustification bias. Lagged health variables are employed to examine the impact of preretirement health on current retirement choices. Fixed effects models are also used tocontrol for potential omitted variable bias. The findings indicate that poor pre-retirementhealth significantly increases the likelihood of retirement compared to excellent healthacross all specifications. Moreover, subjective health measures remain significant evenwhen objective health measures are included.