Close
ThinkAdvisor

Retirement Planning > Spending in Retirement > Lifestyle Planning

Does Working Longer Help You Live Longer?

X
Your article was successfully shared with the contacts you provided.

What You Need to Know

  • A CRR analysis of a Dutch tax incentive finds a possible link between working longer and increased longevity.
  • It's unclear whether working longer reduces mortality or healthier people choose to work longer.
  • It's also unclear whether the reduced mortality rates of those who worked longer continue past age 70.

Working longer certainly can contribute to improved financial security in retirement. But can it also benefit physical, mental and cognitive health by keeping workers active?

A report by the Center for Retirement Research at Boston College examined the connection between longevity and a policy change in the Netherlands that provides a tax credit to encourage Dutch works to keep working into their mid-60s.

Previous studies have tended to focus on policies that encourage workers to retire early, which have been more common than policies aimed at working longer. However, the factors that encourage people to retire early likely are not merely the opposite of the factors that encourage them to work longer.

People deciding whether to work longer likely are healthier than those contemplating early retirement. Many individuals in low socioeconomic groups may not even have the option to keep working given deteriorating health and diminishing job opportunities.

It is difficult to measure the relationship between working longer and longevity, researchers said. A simple estimate likely would find that longer work lives and lower mortality rates are correlated. But the question is, does working cause the worker to live longer? The effect may actually work in the opposite direction: Better health may cause people to keep working. In addition, some other factor, such as income, could cause both better health and a desire to keep working.

As expected, the raw data show that Dutch men who worked at ages 62 to 65 were less likely to die over the subsequent five years than men who were not working. A key question is whether the reduction in mortality is only temporary and will occur only during the five-year window studied in this analysis or whether it will put mortality on a permanently lower track.

If the reduction in men’s mortality is only temporary, their remaining life expectancy after age 60 would rise from 21.5 years to 21.7 years, or about two extra months. If, however, the effect on mortality is longer lasting, remaining life expectancy could increase by about two full years.

As countries move to encourage later retirement, one crucial piece of information is still uncertain — whether working longer improves mortality. The simple correlation between working and mortality does suggest a relationship, but it does not imply that work is causing the better outcomes.

“These results require some caveats,” the report concluded. “First, the causal estimates relate to the people who responded to the tax policy by working longer and may not apply to everyone who worked longer. Second, the tax policy takes a ‘carrot’ approach, offering incentives to work longer, rather than the ‘stick’ approach of some U.S. proposals that aim to discourage early retirement by reducing benefits; it is unclear whether a penalty would be more or less effective than a bonus.

“Nonetheless, these results indicate that encouraging some people to work longer may result in longer lives.”