Life expectancy in Israel is rising alongside increasing levels of good health, and with these developments comes an increase in the number of years that people continue to work and a growing public discussion about the official retirement age. Is the decision to continue working after retirement age borne out of necessity or choice? Is there an interest among the elderly in changing the retirement age? How does the decision to continue working affect levels of happiness? A new study from the Taub Center looks at happiness among adults ages 60 to 80 and the socio-economic factors that influence them. Among other things the study examines the division of time between work and leisure, volunteering, attitudes regarding the retirement age, and the connection between happiness levels and various socio-demographic variables. The study shows that employment increases rather than depresses happiness levels as do relationships with a partner and having children. Israeli workers are not against raising the official retirement age, and, in fact, indicate a desire to continue working past that age, although they often retire early for a variety of reasons.
Over the past few decades, with increasing life expectancy and greater needs for financial reserves to enjoy the retirement years, along with the fact that people are enjoying better health and can continue to work, the issue of the official retirement age has become part of the public discourse. A new study from the Taub Center conducted by Dr. Hila Axelrad of Tel Aviv University and IDC Herzliya, Prof. Israel Luski of Western Galilee College and Ben-Gurion University of the Negev, and Dr. Arie Sherman of Ruppin College, examines the impact of employment among adults ages 60 to 80 on happiness levels, and seeks to understand the role that employment fills in this life stage. Is it solely for the purpose of making money, or does employment serve additional purposes?
Living longer, living healthier – why aren’t people working longer?
The labor force participation rates of adults in Israel are on the rise following a gradual increase in the official retirement age. Various studies show that more and more older adults show a desire to work longer, that they tend to stay at their place of employment longer than younger employees, and that they are more loyal – characteristics that are an advantage to employers. The number of older workers who use digital technologies is also increasing steadily, and they are often interested in honing those skills when given the opportunity. Another advantage of older workers is that their integration into the labor force serves to educate younger workers and leads to a decline in absenteeism and turnover among younger workers. However, many adults who are interested and able to continue working encounter ageism despite it being illegal. The difficulty older adults have in finding employment shows that the professional experience that they may bring to work is undervalued, and that for many employers, it does not make up for what they may perceive as declining physical and mental abilities.
This phenomenon pushes productive adults with valuable experience to society’s margins and harms their earning power, contributes to a widening of the circle of poverty and burden on welfare institutions, and even damages labor productivity and the GDP.
Working more increases happiness levels
The Taub Center study examines the study of the individual’s decision to retire, to retire early or to delay retirement on life satisfaction levels. It is based on two databases: data from the Survey of Health, Ageing and Retirement in Europe (SHARE) which includes data from Israel on health, employment, and social status between 2004 and 2016 among the non-Haredi Jewish population ages 60 to 80, and a data set built by the researchers specifically for this study using targeted questionnaires to examine the impact of employment on happiness levels in 2019. The analysis examined, among other things, the decision to retire or to continue working, changes in the employment level (full or part-time employment), and attitudes towards retirement policies. Haredi Jews and Arab Israelis were not included in the sample due to their unique employment characteristics. The average age of survey respondents was 67 almost half were men, about 72% married, close to 70% Israel-born, about 73% secular, and about 56% still working.
According to data from the SHARE study, those who are still working express substantially higher levels of happiness than those not employed. With increasing age, there is a drastic reduction in employment rates and some reduction in happiness levels. There were no significant differences between men and women, although the employment levels of women were substantially lower than those of men.
The principal influences on happiness levels: Employment in work that fosters development, volunteering, a partner, and children
An examination of socio-demographic variables shows that happiness levels are highest among those who are in a relationship (whether or not they are working), and rises with the number of children. The lowest levels of happiness are among those who are working and single and those who are not working and divorced. In addition, happiness levels are higher as income increases and with good health; poor health negatively impacts happiness levels both among those who are working and those who are not. There was no clear effect of gender, family status, and higher education.
A look at employment variables shows that happiness levels are influenced primarily by type of employment. Employment that promotes individual growth (work that requires thought such as development, administration, and research) has a statistically significant positive influence on happiness levels, as does volunteering. Work under high pressure (work with constant time constraints, multi-tasking, and deadlines) has a clear negative impact. The number of work hours also has an effect – long, high-pressure work hours lower happiness levels, while longer work hours in work with a growth element leads to higher happiness levels.
An international comparison shows that older unemployed adults in Europe attest to higher happiness levels than those who are employed, while in Israel, there is no clear difference. In terms of type of employment, the impact is similar – work under high pressure harms happiness levels while work that fosters personal growth raises them.
Workers in Israel retire early but do not object to raising the official retirement age
The researchers analyzed the question of retirement age and the factors that influence the decision to retire or to continue working in the survey questionnaire they designed. Their analysis shows three major points:
- The average retirement age among men is about 61 and among women is 59, although respondents attested to a desire to retire at a later age (70 for men and 67 for women). There was no objection to the idea of raising the official retirement age.
- The major reason to continue working after the age of 60 is to increase income. Other reasons are satisfaction from work, preserving human capital and work skills, and social elements. The data show that more than half of those who retire from work do so voluntarily and that they show happiness levels higher than the average.
- The decision to retire stems from a number of factors: 22% indicated health reasons, 11% an expectation of lowered income should they continue to work, and 16% noted difficulty in finding employment in their field.
Health reasons have a substantial impact on the decision to retire, and poor health lowers the age of retirement by an average of 6.5 years. The average retirement age among women is about 3 years lower than for men, and difficulties in finding work lowers the age of leaving the work force by an average of more than 2 years, as does a willingness to make do with one’s current income. Suitable policies that place an emphasis on improving health status and widening the supply of work positions for older adults could increase the employment rates substantially among this population.
“We found that early retirement from the labor market often stems from employment difficulties, and the tendency of many to seek employment in their field of expertise and at salary levels that they are used to. It is important to enforce the anti-ageism laws, and to develop programs for vocational training for older adults as well,” explains Dr. Hila Axelrad. “In addition, this subject should be explored among the Arab Israeli and Haredi populations in Israel, in view of their special characteristics, to get a fuller picture of the situation in Israeli society.”
The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis.
For details, or to arrange an interview, please contact Anat Sella-Koren, Director of Marketing, Communications and Government Relations at the Taub Center for Social Policy Studies in Israel: 050-690-9749.
 Prof. Israel Luski, a founder of the Economics Department at Ben-Gurion University of the Negev, and a researcher in industrial organization, labor economics and adult employment, passed away shortly before publication of this paper.