DOES AGE-RELATED DECLINE IN ABILITY CORRESPOND WITH RETIREMENT AGE?

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 90 percentile of the Index are 5.7 percentage points more likely to retire by age 65 than workers in the 10 percentile. • When controlling for the Susceptibility Index, the commonly used categorization of blueor 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. Introduction Nobody can withstand the effects of time. With age, even among the fittest individuals, skin and arteries harden, reaction times slow, and immune function diminishes. While declines in physical and mental performance are inevitable, they are not uniform across the various systems of the body. This variance means that the different abilities used to perform tasks at work and at home decline at different rates as individuals age. For example, explosive strength (e.g. the ability to jump) declines significantly during one’s working life, while static strength (e.g. the ability to hold up a weight) declines relatively little during the same period. Workers in occupations that rely on abilities that decline fastest are also likely to be at the greatest risk of retiring early. Most research on retirement timing attempts to proxy the possibility of early decline by controlling for whether a worker’s occupation is blue or white collar – the basic assumption is that white-collar workers can work longer and blue-collar workers cannot. But is this distinction appropriate? Are all white-collar workers able to work well into their sixties and, if not, which occupations are most vulnerable? Are certain blue-collar jobs better than others in terms of allowing a long working life? Although these questions have implications for policymakers considering ways to encourage individuals to work longer, to date researchers have not identified a systematic way to fully account for the relationship between occupation and early retirement. To address this issue, this paper presents a Susceptibility Index that measures how susceptible the abilities required by an occupation are to decline during the working years. The project draws inspiration from a “work-ability index” developed in Finland to measure municipal workers’ physical, mental, and psychological capacity to meet work demands and identify workers in need of occupational therapy. Several studies using this index reported significant heterogeneity in work ability across occupations among older workers (Ilmarinen and Klockars 1997; Ilmarinen, Tuomi and Seitsamo 2005). The goal of this project is to first construct an index that identifies occupations that place importance on abilities that decline early and then to explore whether workers in such occupations will retire earlier regardless of whether the occupation is white or blue collar. 1 As one example, fluid intelligence (the ability to think logically) declines well in advance of crystalized intelligence (acquired knowledge). See Salthouse (2009). 2 Spirduso, Francis, and MacRae, 2005.