We investigate the causal effect of retirement on health and cognitive abilities by exploiting the
panel dimension of the first two waves of the Survey of Health Ageing and Retirement in Europe
(SHARE) and the variation between and within European countries in old age retirement rules.
We show evidence of substantial heterogeneity in the effect of retirement across occupational
groups. In particular, we find that retirement increases the age-related decline of health and
cognitive abilities for most workers. On the other hand, we find evidence of a positive immediate
effect of retirement for those employed in highly physically demanding jobs.