Early retirement is a nice dream for many of us who are squirrelling our savings. But perhaps financial independence is just one obstacle to the freedom we crave.

Another one: concerns about cognitive decline when we exit the workforce.

The connection between working and staying mentally sharp is a hot topic among researchers, given our aging population and the rising number of dementia cases.

A recent working paper from researchers at the University of California, Irvine – circulated through the National Bureau of Economic Research – adds a cautionary note. Cognitive decline shows up in people who have exited the workforce long before the typical retirement age of 65.

“Does employment slow cognitive decline? Evidence from labor market shocks,” is written by David Neumark, professor of economics; graduate student Noah Arman Kouchekinia; and Tim Bruckner, professor of health, society and behaviour.

There is ample evidence that extending employment around the typical retirement age of mid- to late-60s can delay the onset of cognitive decline. What’s less known is whether employment at significantly younger ages – say, in our early 50s – delivers similar protection.

The answer appears to be yes.

Using U.S. data, the researchers found that there are substantial declines in cognitive scores among people who have left the workforce early, largely as a result of disappearing jobs. The declines were especially pronounced among men aged 51 to 64, given that this group may be sensitive to local labour market conditions.

In other words, the paper largely addresses the impact from disappearing jobs in some sectors of the economy, rather than the choice to take early retirement – but the results should resonate with early retirees as well.

The research has policy implications: Government efforts to promote work should enhance retirement security and encourage a healthy aging population.

“Thirty years ago, people used to move to where the jobs are,” Mr. Neumark told me in an interview.

Now, possibly because of the large differences in home prices, working-age people are more likely to stay put.

“We were interested in understanding that phenomenon, because that’s a group where, in principle, employment rates could be a lot higher because people don’t typically retire at those ages,” Mr. Neumark said.

The research pertains to the United States, but there could be valuable takeaways for Canadians, too – or anyone, for that matter, facing either voluntary or involuntary loss of employment.

And what about those of us who still look at early retirement as a lofty goal?

The research doesn’t kill the dream. But it does add to the emerging consensus that the benefits of work extend well beyond the regular paycheques – along with the importance of staying mentally fit after we surrender the corner office, even if that’s at a relatively young age.

If you are contemplating an early retirement, or your job prospects have disappeared, do you have a plan for staying mentally active? Let me know at dberman@globeandmail.com.

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