Happy retirement?

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’.

The Life Course Centre is a national research centre investigating the critical factors underlying disadvantage to provide life-changing solutions for policy and service delivery.

Established in 2014, the Centre is administered by The University of Queensland and is a collaboration with The University of Sydney, The University of Melbourne and The University of Western Australia as well as international partners and experts.

It is supported by key government agencies that have responsibility for developing and implementing Australia’s social and economic welfare programs, and by non-government organisations that work at the front line to deal with real-world problems of poverty and disadvantage.

It aims to leverage evidence-based research to develop new knowledge, technology and practices to benefit Australian children and families living in disadvantage.

This work includes identifying the drivers of deep and persistent disadvantage; developing and trialling new solutions in policy and practice; training the next generation of research leaders; and building capacity across government, researchers and non-government organisations.