Life Satisfaction and Retirement: A Latent Growth Mixture Modelling Approach

Abstract

Retirement is an important life course event, potentially involving major changes to an individual’s economic and social circumstances. This research aims to contribute to a better understanding of how retirement is experienced in Australian society. Latent Growth Mixture Modeling (LGMM) was used to investigate individual trajectories in life satisfaction across the retirement transition. The LGMM approach allows the identification of latent subgroups of people who experience retirement differently and the examination of variations in the characteristics and resources of those groups. The analytical sample is based on the first 9 waves of HILDA and includes 600 people (302 men, 298 women) who made a single transition into retirement and who stay retired. Three groups of respondents experiencing different trajectories of life satisfaction were identified by the models. The first group, by far the largest comprising 88% of respondents, was identified as the ‘maintainers’ and showed relatively high and stable levels of life satisfaction. A second group, comprising 7% of respondents, was identified as the ‘adapters’ and experienced a decline in life satisfaction in the three years leading up to retirement, followed by an increase after retirement. The final group, 5% of respondents, was identified as the ‘decliners’ and showed a steady decline in life satisfaction in the three years after retirement. Covariates were included to model life satisfaction trajectories within and between the three latent groups. The results show that while most people experience very little retirement related change in life satisfaction, there are latent subgroups that experience significant change. These subgroups have been found to have lower levels of health and less access to a range of social and economic resources.