Abstract
<p>As populations age, it is increasingly important to understand the factors that shape life satisfaction among older adults. Financial security is widely considered one of the major life domains that contributes to life satisfaction. However, there is a scarcity of longitudinal studies examining how financial satisfaction affects overall life satisfaction among older adults. Previous analyses have mainly focused on cross-sectional associations rather than causal designs. This study addresses several existing research gaps by using longitudinal survey data on Finnish old-age pensioners aged 64 or over. Fixed effects linear regression models are used to help isolate the effect of financial satisfaction. A sensitivity analysis is conducted to determine whether unobserved confounders could explain the results. In addition, to contextualize the observed effect of financial satisfaction, we compare that effect with the effects of changes in major life-course events. The study finds that financial satisfaction has a considerable effect on overall life satisfaction. Sensitivity analysis suggests it is unlikely that the effect of financial satisfaction is explained by unobserved confounders, lending further support to the idea that there is a causal relationship. Changes in financial satisfaction are more relevant to life satisfaction than changes in self-rated health. Changes in partnership status or work status had no effect on life satisfaction. Overall, the study shows that changes in financial satisfaction influence life satisfaction among older adults. Improving financial security in retirement can therefore be expected to also improve subjective well-being among aging populations.</p>