We propose an overlapping generations model that examines the macroeconomic effects of an increase in the retirement age as a response to an ageing population and deteriorating dependency ratios, calibrated for the case of the UK. Households make decisions on health care spending and general consumption, while life expectancy, working hours lost due to illness, the dependency ratio and growth are determined endogenously. Our results suggest that an increase in retirement age induces agents to increase medical spending. Households invest in their level of health in order to be fit to work for longer, since older agents that are affected by the retirement age reform have a lower level of health and increased working hours lost due to illness. Furthermore, the higher level of health raises life expectancy, partially offsetting the effects of the retirement age reform with respect to dependency ratios.