The Power of Working Longer

Gila Bronshtein, Jason Scott, John B. Shoven and Sita Slavov

No 24226, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper compares the relative strengths of working longer vs. saving more in terms of increasing a household’s affordable, sustainable standard of living in retirement. Both stylized households and actual households from the Health and Retirement Study are examined. We assume that workers commence Social Security benefits when they retire. The basic result is that delaying retirement by 3-6 months has the same impact on the retirement standard of living as saving an additional one-percentage point of labor earnings for 30 years. The relative power of saving more is even lower if the decision to increase saving is made later in the work life. For instance, increasing retirement saving by one percentage point ten years before retirement has the same impact on the sustainable retirement standard of living as working a single month longer. The calculations of the relative power of working longer and saving more are done for a wide range of realized rates of returns on saving, for households with different income levels, and for singles as well as married couples. The results are quite invariant to these circumstances.

JEL-codes: D14 H55 J26 (search for similar items in EconPapers)
Date: 2018-01
New Economics Papers: this item is included in nep-age and nep-lma
Note: AG
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Citations: View citations in EconPapers (3)

Published as The Power of Working Longer , Gila Bronshtein, Jason Scott, John B. Shoven, Sita Nataraj Slavov. in Incentives and Limitations of Employment Policies on Retirement Transitions , Clark and Newhouse. 2019
Published as Gila Bronshtein & Jason Scott & John B. Shoven & Sita Nataraj Slavov, 2019. "The power of working longer," Journal of Pension Economics and Finance, vol 18(04), pages 623-644.

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Journal Article: The power of working longer (2019)
Chapter: The Power of Working Longer (2018)
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