Gila Bronshtein, Jason Scott, John Shoven and Sita Slavov

The paper presents many examples that illustrate how working longer can increase the amount of retirement income that hypothetical workers of various ages might receive. For example:

  • Workers currently age 66 could increase their ultimate annual retirement income by 7.75% by working one more year and retiring at age 67. This is a much higher return than most workers could achieve investing on their own.
  • Workers age 62 could increase their ultimate retirement income by almost one-third by working four more years until age 66 and by almost three-fourths by working eight more years until age 70.

These examples are for workers who earn the national average wage, which the report estimates to be about $52,350 for workers age 55 to 64. Delaying Social Security benefits accounts for roughly three-fourths of the total increase in retirement income. The rest of the increase results from allowing retirement savings more time to grow and needing retirement income for a fewer number of years. Working longer may be easier said than done for many workers. Nevertheless, the paper shows it can be the action step with the most potential. This helps employers and older workers focus their creativity and resilience on the challenge of longer lives.

This article was recommended by Steve Vernon, FSA, Research Scholar in the Financial Security Division at the Stanford Center on Longevity.