This paper investigates the causal relationship between ill-health and retirement among older working
individuals. We represent the transition to retirement as a discrete-time hazard model using a stocksample
from the first five waves (2001-2005) of the Household, Income and Labour Dynamics in
Australia (HILDA) Survey. Our results show that health plays an important role in individual
retirement decisions and that negative shocks to health greatly increase the hazard of retirement,
especially for men. This is true for both a measure of health limitations and a measure of latent health
obtained using pooled ordered probit models, as well as for three alternative health shock measures.
We also consider the effects of partners’ health and labour market status on an individual’s retirement
decision. Our estimates suggest that partners’ characteristics do not significantly influence individual
retirement choices.