The retirement transition and retirement-savings behaviors: Three essays analyzing various retirement concerns focusing on military veterans

It is well documented that individuals who serve in the military are at a higher risk of experiencing negative health effects later in life. This may be due to the type of job they have in the military, and it also may be induced by certain negative health behaviors, such as smoking or drinking, that are prevalent in the military community. Those that serve in the military also are at a higher risk of suffering from mental-health-related problems because of their experiences during service. Additionally, the previous literature highlights the greater pre-mature mortality rate in the veteran community compared to the civilian community. This rate measures the number of deaths below the age of 75 and suggests that veterans are dying at a younger age, on average. While service in the military may present its own health-related issues, many of the older population of the United States (U.S.) may soon be experiencing health-related issues as they transition into retirement. The decision to retire is said to depend on many factors including one’s lifetime earnings, the present value of expected lifetime retirement income, and an individual’s relative preference for household production time compared to market production time. The reason the retirement decision is of particular importance is because the research surrounding retirement’s impact on an individual’s overall health suggests that retirement may adversely affect overall health. Fortunately, the affects can be mitigated in some form or another. It is important for policy makers to understand the degree that retirement may influence physical and mental outcomes. This may help to determine whether there is a need to further incentivize continued workforce participation or offer retirees other incentives to increase overall health and financial well-being.
In recent years, there has been a dramatic shift in the labor force composition in the U.S., as the Baby Boom generation began their journey into retirement around 2011. This significant shift of older individuals out of the labor force is going to have a profound impact on the Social Security system due to the structure of the program where younger workers essentially fund older workers’ benefits. Because the fertility rate also has dropped in the U.S., there will be fewer young workers entering the labor force to help the Social Security system fund the large influx of retirees in the coming years. Thus, individuals may have to rely less on social security for their retirement needs. The following three essays analyze how the decision to retire influences a respondent’s mental and physical well-being and what factors are associated with positive retirement-savings behaviors. The first essay will examine the association between respondents’ physical health and retirement decisions while controlling for other factors to see the role of retirement on late-life health issues. The second essay will examine the association between respondents’ mental health and the retirement decision, controlling for other factors, to evaluate how the decision to exit the labor force can influence one’s cognitive and mental abilities. Finally, the third essay will examine the association between financial literacy, financial education, and retirement-savings behavior. The first two research questions will be analyzed using seven of the most recent waves of the Health and Retirement Study (HRS), a panel study conducted on Americans ages 50 and older to examine retirement and health-related issues. The final research question will be analyzed using the National Financial Capability Survey, a nationally representative survey of Americans. This research aims to aid policy makers and financial planning practitioners in understanding the associations between retirement and an individual’s physical, mental, and financial well-being. Policy makers can use this to adjust government incentive programs that encourage or discourage longer work lives. Financial planning practitioners can use the research to educate their clients on the advantages and/or disadvantages of retiring early or later, so they can help them make a more informed decision about when to exit or begin exiting the labor force. Financial planning practitioners also may use this research to encourage and provide a higher level of financial education to their clients.