Early retirement can lead to cognitive decline, study shows

Seeing retirees play chess in the park or Bingo in the community hall was something that Alan Adelman appreciated while he was living in Brooklyn.

“When people retire, they generally don’t go out as often or take part in social activities,” the economics doctoral student said. “When that happens, old age can get the best of you. Those people who don’t engage start to lose memory faster.”

Research from Adelman and Plamen Nikolov, an assistant professor of economics, suggests that social engagement and keeping mental skills sharp are necessary for the elderly, as early retirement can actually accelerate cognitive decline. The duo’s paper on the topic was published in the IZA Institute of Labor Economics.

In the study, Adelman and Nikolov examined the effects of Chinese pension benefits and retirement plans on individual cognition. With a higher life expectancy and decline in fertility in developing countries, the growing elderly population has generated an urgent need for new, sustainable pension systems.

“In the next three to four decades, the age group of 65 and above will rise even more rapidly” in China and other Asian countries, Nikolov said.

Because of its large demographic boom, China introduced a formal pension system called the New Rural Pension Scheme (NRPS) in rural parts of the country to alleviate senior poverty. Adelman and Nikolov used data from the Chinese Health and Retirement Longitudinal Survey (CHARLS), which directly tests cognition on people above the age of 45.

The researchers discovered that there were significant negative effects of pension benefits on cognition functioning among the elderly. The largest indicator of cognitive decline was “delayed recall,” a measure that is widely implicated in neurobiological research as an important predictor of dementia. Data supported the mental retirement hypothesis that decreased mental activity results in the worsening of cognitive skills.

“Individuals in the areas that implement the NRPS score considerably lower than individuals who live in areas that do not offer the NRPS program,” Nikolov said. “Over the almost 10 years since its implementation, the program led to a decline in cognitive performance by as high as almost a fifth of a standard deviation on the memory measures we examine.”

The results surprised Nikolov and Adelman, who found in a previous study that pension benefits and retirement led to general health benefits thanks to sleep improvement and a reduction in alcohol consumption and smoking.

“The fact that retirement led to reduced cognitive performance in and of itself is a stark finding about an unsuspected, puzzling issue, but a finding with extremely important welfare implications for one’s quality of life in old age,” Nikolov said.

For cognition among retirees, it appears that the negative effects on social engagement outweigh the positive effects of the program on nutrition and sleep, he added.

“The kinds of things that matter and determine better health might simply be very different than the kinds of things that matter for better cognition among the elderly,” Nikolov said. “Social engagement and connectedness may simply be the single most powerful factors for cognitive performance in old age.”

Adelman believes this is an area that he and Nikolov need to further examine.

“We want to dive deeper into the social engagements and determine which activities and engagements change after retirement and how they may affect cognitive functioning,” he said. “Our initial analyses show that women are withdrawing from the labor force, especially for nonfarm self-employment activities, at considerably higher rates than men. However, we are examining and trying to understand the various mechanisms that generate the steeper cognitive decline gradient for women than men.”

Nikolov said he hopes the duo’s research will help policymakers — particularly in developing countries — improve the cognitive functioning of older generations during retirement.

“We show robust evidence that retirement has important benefits — but it also has considerable costs,” he said. “Policymakers can introduce policies aimed at buffering the reduction of social engagement and mental activities. In this sense, retirement programs can generate positive spillovers for the health status of retirees without the associated negative effect on their cognition.”

In the meantime, Adelman has some simple advice for those considering an end to their working years.

“You can retire early; just don’t stop using your brain,” he said. “It’s important to stay mentally active.”