In a “new normal” of lower returns, workers change their behavior to adjust — and one study says that the more highly educated they are, the more drastic the changes will be.
Faced with the expectation of lower returns in global capital markets, workers work more, stick it out at the job longer and save less money in tax-advantaged accounts. They also postpone claiming benefits from Social Security, relying on funds from retirement accounts sooner. But lesser-educated workers make fewer changes than those who are more highly educated.
So says a new paper presented by the National Bureau of Economic Research. How much workers change their behavior, however, depends on how tuned in they are to interest rate changes — and that’s where education comes in.
The study’s first finding is that workers claim Social Security later — an average of 1.5 years later — and work an average of more than three hours more per week, in an atmosphere of low returns.