Early retirement for Gen X workers is increasingly linked to measurable cognitive decline, according to research from the National Bureau of Economic Research (NBER) and the University of California, Irvine. While financial pressures often drive the decision to stop working, economists warn that premature exit from the labor force can accelerate health issues, creating long-term economic and personal costs that outweigh the immediate appeal of leisure.
The Link Between Employment and Cognitive Health
A working paper published this May by the NBER established a causal relationship between consistent employment and sustained cognitive function among adults aged 51 to 75. Researchers utilized data from the University of Michigan’s Health and Retirement Study (HRS)—a longitudinal project tracking cognitive ability—and cross-referenced it with U.S. Census Bureau County Business Patterns.
The analysis found that individuals experienced "substantial declines" in cognitive scores following significant negative labor demand shocks. David Neumark, a professor of economics at the University of California, Irvine, and a coauthor of the study, noted that the findings provide a clear incentive for maintaining workforce participation as long as possible. "This would be yet another reason to say, ‘We should really think about the potential consequences of a really large-scale decline in employment,’" Neumark told Fortune.
Economic Consequences of a Graying Workforce
The economic impact of early retirement extends beyond the individual worker. According to an analysis by the University of Southern California, Alzheimer’s disease and other forms of dementia cost the U.S. economy an estimated $781 billion in 2025. This figure accounts for direct medical care, lost earnings from patients, and the economic output lost by caregivers who must leave the workforce to support family members.
These costs compound the broader issue of a shrinking labor pool. A 2016 study projected that annual GDP growth would slow by 1.2% between 2016 and 2026 due to an aging population. While roughly one-third of this decline is attributed to a decrease in the number of older workers, the majority of the impact stems from reduced productivity among the aging workforce.
Financial Risks of Retiring Before 65
Financial stability remains a primary concern for Gen X workers, as many lack access to traditional pensions. With the average Social Security benefit hovering around $18,000 per year, those who claim benefits at age 62 receive significantly lower monthly payments compared to those who wait until age 70.
Approximately 35% of workers who have been unemployed for more than 24 weeks are over the age of 55, according to an April 2025 analysis. Despite these risks, about half of retirees report that their decision to leave the workforce was a personal choice.
Strategies for Workforce Retention
Experts suggest that policy shifts could help older workers remain employed longer, potentially mitigating both cognitive decline and economic stagnation. Neumark points to Social Security Disability Insurance (SSDI) recipients as a key group, noting that about 28% attempt to return to work within 10 years of receiving benefits.
To improve retention, Neumark advocates for:
- Flexible Work Arrangements: Implementing variable hours to accommodate older workers.
- Phased Retirement: Creating programs that allow for a gradual reduction in duties rather than a total exit.
- Proactive Employment Policies: Increasing support for retraining and trade adjustment assistance.
Increasing awareness regarding the health risks associated with early retirement may serve as a critical factor for individuals weighing their departure from the workforce. "We have some influence on the margins about both people losing jobs and things we might do to help them find reemployment if they did," Neumark said.
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