Poor health and retirement income: the Canadian case

Abstract

Using the 1994 Canadian General Social Survey, this study examines the economic effects of retiring because of poor health. When men and women who have retired for reasons of poor health are compared to those who have retired for other reasons, the health retirees are disadvantaged on measures of their health, on human capital variables, in terms of their work history, and ultimately, in their retirement income whether personal or household. The men who retired because of ill health were less likely to receive income from a private pension or from interest and dividends. Almost half of the men reported that their financial situation was worse since their retirement. The women retirees suffered from the same disadvantages as the men although their incomes in retirement were much lower. In the multivariate analyses, health had a significant and negative effect on men's household and personal incomes but there was no effect on the incomes of women. For them, any effect that poor health might have had on household income was offset by factors associated with marriage, and the women's own socio-demographic characteristics. The findings suggest reason for policy-makers to be cautious when contemplating blanket reductions in disability/invalidity and pension rates.