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Cognitive impairment has emerged as a major driver of disability in old age, with profound effects on individual well‐being and decision making at older ages. In the light of policies aimed at postponing retirement ages, an important question is whether continued labour supply helps to maintain high levels of cognition at older ages. We use data of older men from the US Health and Retirement Study to estimate the effect of continued labour market participation at older ages on later‐life cognition. As retirement itself is likely to depend on cognitive functioning and may thus be endogenous, we use offers of early retirement windows as instruments for retirement in econometric models for later‐life cognitive functioning. These offers of early retirement are legally required to be nondiscriminatory and thus, inter alia, unrelated to cognitive functioning. At the same time, these offers of early retirement options are significant …