Health Status, Disability, and Retirement Incentives in Belgium

Many Belgians retire well before the statutory retirement age. Numerous exit routes from the labor force can be identified: old‐age pensions, conventional early retirement, disability insurance, and unemployment insurance are the most prominent ones. We analyze the retirement decision of Belgian workers adopting an option value framework, and we pay special attention to the role of health status, in particular the potential link between health status, disability insurance and retirement for contractual wage earners aged 50 to 64. We estimate probit models of retirement using data from the Survey of Health, Ageing and Retirement in Europe (SHARE). The results show that health and incentives matter in the decision to exit from the labor market. Based on these results, we simulate the effect of potential reforms on retirement.