With financially unprepared boomers careening toward a retirement train wreck, a new, international study showing a “happiness premium” for late-life workers may have come just in time.
Indeed, the recently published paper by Brookings senior fellow Carol Graham and University of Maryland professor Milena Nikolova suggests that re-envisioning work may offer multiple benefits aside from enhanced well being (colloquially referred to as happiness).
These include a reduction of the burdens on unsustainable public pensions and increased opportunities for younger people struggling to enter the labor market, with both older and younger people happier as a result of work arrangements better suited to their respective life situations.
In a Brookings summary of the report, the authors note that the determinants of happiness are remarkably consistent across countries and culture.
Age is a key factor, with age 40 — a time when overburdened working parents may be at peak stress — representing an international low point in happiness within a U-curve, with high points at age 18 matched at the other end at around 65, followed by continually rising peaks of happiness into the seventies, eighties and nineties.
Health, marriage, income and employment are also positively associated with happiness. On the flipside, unemployment is associated with unhappiness — and even if the jobless are compensated for their lost income through welfare payments, they are less happy than “identical employed counterparts,” the report finds.
The study’s authors focused particularly on the relationship between employment, work arrangements and happiness and concluded:
“voluntary part-time workers are happier, experience less stress and anger, and are more satisfied with their work than other workers. In addition … older workers who remain in the labor force under voluntary part-time or full-time arrangements have higher well-being than comparable retirees.”
While acknowledging that individual circumstances vary, the authors cite social interaction, personal growth, independence and a sense of purpose as key benefits of late-life work. Moreover, older workers who were self-employed were more likely to report having an ideal job.
In addition to the significant increases in happiness of older workers, the authors hope to inform policy discussions about adapting public policy to address current challenges in the labor market: namely the plight of underemployed youth and the toll aging populations are taking on international Social Security systems.
Thus, changed norms whereby older workers only gradually reduce their working hours would increase tax revenue and lower pension expenditures, while potentially creating novel solutions for other segments of the labor market — a particularly big challenge in places like Spain where youth unemployment stands at 53%.
In their Brookings study summary, they conclude as follows:
“Perhaps we can imagine a future where overburdened middle-aged workers with children have more flexibility to work part-time, with late-life workers taking up some of the slack. The latter would help ease the burdens posed by fiscally unsustainable pension systems. And more flexible labor market arrangements might also provide more opportunities (full or part time) for youth to enter the labor market on a training basis as a first step.”
Check out Time to Retire the Idea of Retirement on ThinkAdvisor.