Although initially there may be a small bounce in health, over the medium-longer term retirement causes a drastic decline in health, says the study by the Institute of Economic Affairs and the Age Endeavour Fellowship.
The study recommended that the government should help people work longer and raise the state pension ages, Xinhua reported.
The study, titled "Work Longer, Live Healthier: The Relationship Between Economic Activity, Health And Government Policy", said retirement decreases the likelihood of being in "very good" or "excellent" self-assessed health by about 40 percent, while it increases the probability of suffering from clinical depression by 40 percent and the probability of having at least one diagnosed physical condition by about 60 percent.
"There is now general agreement that state pension ages should be raised. The government should take firmer action here and also deregulate labour markets. Working longer will not only be an economic necessity, it also helps people to live healthier lives," said Philip Booth, editorial and programme director at the Institute of Economic Affairs.
In the past 50 years, there has been a significant drop in the employment rate among older men in Britain.
The employment rate among men aged 60-64 slumped from around 80 percent to 50 percent between 1968 and the end of the 1990s and, for those aged 65-69, it halved from 30 percent to about 15 percent.