Recent years have shown a huge increase in interest in the so-called “FIRE” (Financial Independence, Retire Early) movement, in which people work hard to save sufficient money to retire early and enjoy a settled retirement of golfing and walks on the beach. However, new research suggests it may not be the dream many claim it is.
According to research by Binghamton University, early retirement may accelerate cognitive decline in older people, suggesting that staying in work could keep the brain sharp. Carried out on a large sample of Chinese people aged 60 and over, the study tested memory and cognition in people with various retirement plans.
The study was created as a means to investigate China’s new pension plans, which aim to reduce poverty in older people.
“Because of this large demographic boom, China introduced a formal pension program (called NRPS) in rural parts of the country. The program was introduced because of China’s rapidly rising aging population and in an effort to alleviate poverty in old age,” said Plamen Nikolov, co-author of the study, in a statement.
“In rural parts of the country, traditional family-based care for the elderly had largely broken down, without adequate formal mechanisms to take its place. For the elderly, inadequate transfers from either informal family and community transfers could severely reduce their ability to cope with illness or poor nutrition.”
The researchers collected data on participants in the National Rural Pension Scheme (NRPS) and how their cognition has been affected following benefit payments. This scheme involves receiving payment after 60 years of age regardless of employment, leading some to retire earlier than before the scheme rollout. Each participant also had data on two metrics: their episodic memory, and mental intactness.
The results showed a decline in memory and cognition at around four years following retirement and subsequent payments, amounting to an estimated 1.7 percent decrease in general intelligence when compared to the average population, according to the researchers’ calculations. Continued enrolment in the program appeared to further their decline.
“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 study does not form an argument against reducing poverty in elderly people – the health risks associated with old-age poverty far outweigh any potential cognitive decline. However, it does add evidence to supporting schemes that promote volunteering and social engagement in older people to maintain cognition into older life.
The research was published in Journal of Economic Behavior & Organization.