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Retirement Planning > Saving for Retirement

Should We All Just Work Longer?

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Working longer is an effective way to boost prospects for a secure retirement, but is it realistic for workers across the socioeconomic spectrum?

The Center for Retirement Research at Boston College released a new brief by Geoffrey Sanzenbacher and Steven Sass titled “Is Working Longer a Good Prescription for All?

“Working longer is one of the most effective ways to improve prospects for a secure retirement. It increases monthly Social Security benefits, allows more time for saving in 401(k)s, and shortens the period of retirement that assets need to cover,” the report states. “Working longer is also widely seen as a reasonable response, because people are living longer and healthier lives.”

The question is whether this prescription is realistic for individuals across the socioeconomic spectrum.

The Center examined this question by looking at the findings of a series of studies and using education as the measure of socioeconomic status.

This series of studies indicates that while it is fair to expect workers of lower socioeconomic status to work longer given rising life expectancies, it is also more challenging for them to do so than for higher-status workers.

The biggest argument for working longer is that people are living longer.

“It seems reasonable for them to work a bit longer, ultimately maintaining the same share of life spent in retirement as previous generations,” the report states.

However, as the brief notes, people are not living longer equally. Less educated workers have seen the smallest gains.

The brief looks at how longevity gains differ by education, and finds that life expectancy at age 65 increased by 4 years for men in the lowest education quartile compared to 6.1 years for those in the highest quartile, a gap of 2.1 years. The gap between the highest and lowest quartiles for women was 1.8 years.

The analysis then calculates a reasonable target for how long people could work.

The results show that more highly educated individuals can indeed work longer than their less educated counterparts while still maintaining the same fraction of their life retired.

But the good news is that even lower-status workers can remain in the labor force long enough to significantly improve their standard of living in retirement.

For example, a man in the lowest quartile can now work to age 68.1 while still maintaining the same work-to-retirement ratio as previous retirees. And a man in the highest quartile can now work until 69.6. For women, it’s 66 for those in the lowest quartile and 67.2 for those in the highest quartile.

So, the analysis finds that it is reasonable for less educated workers to work somewhat longer. However, it may be harder for them to extend their work lives, as they plan to retire earlier and face narrower job options than their higher-status counterparts.

The brief looks at voluntary job-changing as one way for workers to move to a job they prefer and potentially work longer — but will the jobs be there? The brief finds that job opportunities narrow for workers seeking jobs after age 50, although that may be changing.

“Workers in their 50s — both higher- and lower-SES — who move to a new job are far more likely to remain in the labor force to age 65,” the report finds. “And job options for older workers have generally expanded since the late 1990s. Still, lower-[status] men do have more narrow options than others.”

These findings do not invalidate the working-longer prescription, the report states. Instead, the findings suggest that policymakers need to think about whether working longer works equally for everyone.

“Society may need to find remedies, other than working longer alone, that allow lower-SES households to secure an adequate retirement income,” the brief concludes.

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