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Mental Health Around Retirement: Evidence of Ashenfelter’s Dip

Updated: May 12

Mental health issues among retirees have become increasingly concerning because the aging population presents a significant challenge globally, particularly in Western countries. Previous studies on this issue are plagued with bias owing to lacking panel data and estimation strategies. The study investigated the depression levels of European adults around the time of retirement.

A new research paper by Associate Professor Vo Tat Thang, HAPRI's Director, and Duyen Tran, HAPRI' Researcher/Program Manager.

The impact of retirement on mental health is a growing concern globally, particularly due to the challenges posed by an aging population, prompting reforms in pension systems in many European countries to address the strain on social welfare systems. While retirement can positively influence well-being through reduced work-related stress and increased leisure time for activities and social connections, it can also negatively affect mental health due to major life changes, loss of social roles, financial insecurity, and lifestyle adjustments, leading to conflicting results in studies.

Addressing biases in research methodologies and considering various factors such as socioeconomic status, reasons for retirement, and cultural contexts are crucial in understanding the complex relationship between retirement and mental health, particularly in observing changes before and after retirement to grasp the full impact on individuals' well-being.
Observed depression level by age quantile

This research used data from the SHARE, which is a longitudinal, multidisciplinary, and cross-national survey that collects data on the health and socioeconomic status of noninstitutionalized people aged over 50 years in 21 European countries and Israel, along with their social and family networks.

The authors extracted data obtained from Waves 1–7 of SHARE interviews and created panel data covering the 2004–2017 period. The Wave 3 and Wave 7 questionnaires contain SHARELIFE modules that focus on people’s life histories, including all the important aspects of respondents’ lives. The final unbalanced panel contains 182,142 observations from 6 survey rounds.

This study investigated the depression levels of European adults around the time of their retirement. The findings indicated that retiring due to aspirational motivations and positive circumstances reduces the levels of depression, retiring under negative circumstances could escalate depression. These adults must have adjusted their lifestyles in response to their impending retirement. This particular impact before retirement is consistent with Ashenfelter’s dip.

However, two years after the event, when the “honeymoon” phase was over, an increase in retirees’ depression brought their average mental health back to a normal level. From this point in time, the retirees gradually began to develop a realistic view of retirement and eventually adapted to their new lifestyles. At that time, the impact of retirement on mental health was no longer important. The findings in this study are supported by various models of retirement stages in the literature.

Citation: Vo, T.T., Phu-Duyen, T.T. Mental health around retirement: evidence of Ashenfelter’s dip. Global Health Research Policy 8, 35 (2023).

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