We explore the effect of unemployment around the time of retirement on elderly living
arrangements. Specifically, we estimate reduced-form models that relate the age-62
unemployment rate to the living arrangements of men ages 70 and above using data from the
2000 U.S. Census and the 2001 through 2009 American Community Surveys (ACS). We find
that experiencing a higher unemployment rate at age 62 is associated with a reduced probability
of living independently in retirement. The effect is strongest for those who are older, married,
and high school graduates. We show that the effect of labor market conditions on elderly living
arrangements peaks at around age 62, the age of eligibility for Social Security benefits. These
findings, in combination with those from our earlier work, strongly suggest that weak labor
markets around the time of retirement have long-lasting, negative effects on retiree well-being
and that the mechanism for this effect is earlier retirement and claiming of Social Security
benefits.