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The Illusory Benefits of Working Longer on Financial Preparedness for Retirement

Teresa Ghilarducci, Michael Papadopoulos and Anthony Webb ()

No 2020-02, SCEPA working paper series. from Schwartz Center for Economic Policy Analysis (SCEPA), The New School

Abstract: Older workers with insufficient savings are advised to delay retirement. Using Health and Retirement Study data, we compare outcomes of those who delay retirement, a possibly select group, with the predictions of a typical spreadsheet model. Work to age 70 is associated with an 18 percentage-point increase in the share financially prepared for retirement, compared with a predicted 46 percentage points because most older workers claim Social Security and retirement wealth barely increases. Drawing down retirement wealth while working makes sense for most, because earnings are lower than post-retirement income, in part because many older workers voluntarily work part time.

Keywords: Retirement income; Social Security claiming; Older worker labor supply (search for similar items in EconPapers)
JEL-codes: H55 J26 J32 (search for similar items in EconPapers)
Date: 2020-07
New Economics Papers: this item is included in nep-age and nep-lma
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