Health, pensions, and the retirement decision: Evidence from

Using longitudinal data from the Canadian Survey of Labour and Income Dynam-ics, I use an option value framework to examine the effects of health and employer-provided pensions on retirement decisions. This study fills existing gaps in the litera-ture by jointly modeling the impact of financial incentives and health on the retirement decisions of Canadians. The results indicate that both factors have substantial and sig-nificant effects on retirement, as having poor health increases the likelihood of entering retirement by up to 25 percentage points. Given the longitudinal aspect of the data, I am also able to address several identification issues discussed in the literature. The results corroborate previous evidence regarding the relative importance of attenuation and justification bias in self-reported health measures. The results also confirm U.S. and European evidence that employer-provided pensions and health are significant determinants of retirement