Does Age-Related Decline in Ability Correspond with Retirement Age?

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While declines in physical and mental performance are inevitable as workers age, they are not uniform across the various systems of the body – some physical and cognitive abilities decline much earlier than others.  This variance implies that workers in occupations that rely on skills that decline early may be unable to work until late ages, even as policy changes like increases in the Full Retirement Age (FRA) encourage them to.  Researchers often estimate models of early retirement that include a control for whether a worker is in a blue-collar job – basically assuming that less-physical white-collar work allows longer careers.  But this assumption ignores the fact that even workers in white-collar occupations may find themselves relying on skills that have declined.  This paper instead reviews the literature on aging and constructs a Susceptibility Index meant to reflect how susceptible an occupation is to declines in ability, regardless of whether the occupation relies on physical abilities (as blue-collar occupations do) or cognitive ones.

This paper finds that:

  • A variety of white-collar occupations, such as police detective and designer, are just as susceptible to declines in the abilities required for work as are blue-collar occupations.
  • The Susceptibility Index is a significant predictor of early retirement; for example, workers in occupations in the 90th percentile of the Index are 5.7 percentage points more likely to retire by age 65 than workers in the 10th percentile.
  • When controlling for the Susceptibility Index, the commonly used categorization of blue- or white-collar has no additional explanatory power in a model of early retirement.

The policy implications of this paper are:

  • Blue-collar occupations are especially susceptible to early ability declines, so workers in these occupations are less likely to be able to work to the FRA as it increases to 67.
  • In addition, some workers in white-collar occupations may have similar difficulty responding to FRA increases – a possibility that has been largely ignored to date.