An analysis of well-being in retirement: The role of pensions, health, and ‘voluntariness’ of retirement

This paper examines a wide range of determinants of retiree well-being of retirees. Using data from the 2000 Health and Retirement Study, increases in economic factors such as income lead to higher well-being, although relative income has a larger effect than absolute income. The strongest predictors are the voluntariness of entering retirement, pension characteristics, and health. Retirees “forced” to retire or have defined contribution pensions or bad health have significantly lower well-being. The results suggest a more nuanced approach in addressing retiree well-being than just a focus on the economic well-being of retirees.

► This study examines the economic and noneconomic determinants of retiree subjective well-being.
► Increased income positively affects well-being, but the effect is small.
► Involuntary retirement has a very strong negative effect on well-being.
► Holding income constant, retirees with defined contribution pensions has lower well-being.
► Low well-being increases behavior changes such as changes in marital status and residence.