What Makes Retirees Happier: A Gradual or ‘Cold Turkey’ Retirement?

Esteban CalvoKelly Haverstick Steven A. Sass

WP#2007-18

Abstract

This study explores the factors that affect an individual’s happiness while transitioning into retirement.  Recent studies highlight gradual retirement as an attractive option to older workers as they approach full retirement.  However, it is not clear whether phasing or cold turkey makes for a happier retirement.  Using longitudinal data from the Health and Retirement Study, this study explores what shapes the change in happiness between the last wave of full employment and the first wave of full retirement. Results suggest that what really matters is not the type of transition (gradual retirement or cold turkey), but whether people perceive the transition as chosen or forced.