Using a microsimulation model, it is determined that individuals who retire early due to back problems will have as little as $3700 in accumulated wealth for retirement.
This study undertook an economic analysis of the costs of early retirement due to back problems, with the aim of quantifying how much lower the value of accumulated wealth of individuals who exit the workforce early due to back problems is by the time they reach the traditional retirement age of 65 years – compared to those who remained in the workforce. This was done using the output dataset of the microsimulation model Health&WealthMOD. It was found that over 99% of individuals who are employed full time will have accumulated some wealth at age 65 years, whereas as little as 74% of those who are out of the labour force due to back problems will have done so. Those who retire from the labour force early due to back problems will have a median value of total accumulated wealth by the time they are 65 of as little as $3708 (for women aged 55–64 years). This is far lower than the median value of accumulated wealth for those women aged 55–64 years who remained in the labour force full time, who will have $214,432 of accumulated wealth at age 65 years. Not only will early retirement due to back problems limit the immediate income available to individuals, but it will also reduce their long-term financial capacity by reducing their wealth accumulation. Maintaining the labour force participation of those with back problems, or preventing the onset of the disease, should be a priority in order to maintain living standards comparable with others who do not suffer from this condition.
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aNHMRC Clinical Trials Centre and Sydney School of Public Health, University of Sydney, Sydney, Australia
bNational Centre for Social and Economic Modelling (NATSEM), University of Canberra, Canberra, Australia
cNHMRC Clinical Trials Centre, University of Sydney, Sydney, Australia
dUniversity Centre for Rural Health – North Coast, Department of Rural Health, Sydney School of Public Health, University of Sydney, Sydney, Australia
*Corresponding author. Address: NHMRC Clinical Trials Centre, Locked Bag 77, Camperdown, NSW 1450, Australia. Tel.: +61 2 9562 5044; fax: +61 2 9565 1863.
Article history: Received 13 October 2010; Received in revised form 5 October 2011; Accepted 10 October 2011.