If you retire early, you could face 'faster cognitive decline' as you age, according to a new study

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• Millions of Americans retired early during the first years of the pandemic.
• A new study found early retirement can lead to "faster cognitive decline."
• Staying mentally active and maintaining social connections can help combat this.

Millions of Americans retired early during the first few years of the pandemic. Some may come to regret it.

That's based on the findings of a new study out of Binghamton University published in the peer-reviewed Journal of Economic Behavior and Organization. The researchers found that early retirement can lead to "faster cognitive decline among the elderly."

In 2009, China introduced the New Rural Pension Scheme (NRP), an initiative that provided pension benefits to older rural citizens in an effort to reduce poverty among the country's aging population. The Binghamton researchers obtained Chinese government data on millions of older citizens and compared the outcomes of those who used the pension benefits to retire early with those who chose to continue working.

Given a randomized controlled trial was not possible, the researchers used the natural experiment method to "compare how people of similar age and socioeconomic characteristics fared compared to similar individuals, but in areas where the pension program did not exist."

The key findings: Early retirement often led to improved overall physical health, including better sleep and a reduction in alcohol consumption and smoking. But it was also correlated with reduced social engagement, mental activity, and ultimately, an accelerated cognitive decline — of which the most significant indicator was delayed recall, among the predictors of dementia.

"The adverse effects of early retirement on mental and social engagement significantly outweigh the program's protective effect on various health behaviors," lead researcher Plamen Nikolov said in a statement. "Or alternatively, the kinds of things that matter and determine better health might simply be very different from the kinds of things that matter for better cognition among the elderly. Social engagement and connectedness may simply be the single most powerful factors for cognitive performance in old age."

Whether it was due to COVID concerns, soaring home prices and stock portfolios, or people getting used to spending less, over three million Americans likely retired earlier than they had planned during the first 18 months of the pandemic. This exodus from the workforce is one of the main factors behind the labor shortage the US economy is still grappling with.

Some early retirees, faced with inflation and tanking retirement funds, have already come to regret the decision and found jobs. The Binghamton study, however, suggests that even retirees with enough stored away to keep themselves permanently retired may come to question their decision as well. 

Even if the report's findings are true, this doesn't mean early retirement has to be associated with faster cognitive decline. 

"If you rest, you rust," Nikolov told Inc., adding that, "So what I would do, or what somebody can do, is don't isolate yourself." He recommends retirees focus on their "social engagement, active volunteering, and participating in activities fostering their mental acuity."

Nikolov hopes policymakers around the world will take notice of his research and help bring about the "positive spillovers for the health status of retirees without the associated negative effect on their cognition."

"We show robust evidence that retirement has important benefits," he said. "But it also has considerable costs. Cognitive impairments among the elderly, even if not severely debilitating, bring about a loss of quality of life and can have negative welfare consequences."

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