IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/24226.html
   My bibliography  Save this paper

The Power of Working Longer

Author

Listed:
  • Gila Bronshtein
  • Jason Scott
  • John B. Shoven
  • Sita N. Slavov

Abstract

This paper compares the relative strengths of working longer vs. saving more in terms of increasing a household’s affordable, sustainable standard of living in retirement. Both stylized households and actual households from the Health and Retirement Study are examined. We assume that workers commence Social Security benefits when they retire. The basic result is that delaying retirement by 3-6 months has the same impact on the retirement standard of living as saving an additional one-percentage point of labor earnings for 30 years. The relative power of saving more is even lower if the decision to increase saving is made later in the work life. For instance, increasing retirement saving by one percentage point ten years before retirement has the same impact on the sustainable retirement standard of living as working a single month longer. The calculations of the relative power of working longer and saving more are done for a wide range of realized rates of returns on saving, for households with different income levels, and for singles as well as married couples. The results are quite invariant to these circumstances.

Suggested Citation

  • Gila Bronshtein & Jason Scott & John B. Shoven & Sita N. Slavov, 2018. "The Power of Working Longer," NBER Working Papers 24226, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:24226
    Note: AG
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w24226.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. John Ameriks & Joseph Briggs & Andrew Caplin & Minjoon Lee & Matthew D. Shapiro & Christopher Tonetti, 2018. "Shocks and Transitions from Career Jobs to Bridge Jobs and Retirement: A New Approach," Working Papers wp380, University of Michigan, Michigan Retirement Research Center.
    2. Mary J. Lopez & Sita Slavov, 2020. "Do immigrants delay retirement and social security claiming?," Applied Economics, Taylor & Francis Journals, vol. 52(10), pages 1105-1123, February.
    3. Teresa Ghilarducci & Michael Papadopoulos & Anthony Webb, 2020. "The Illusory Benefits of Working Longer on Financial Preparedness for Retirement," SCEPA working paper series. 2020-02, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    4. Jason Scott & John B. Shoven & Sita Slavov & John G. Watson, 2019. "Retirement Implications of a Low Wage Growth, Low Real Interest Rate Economy," NBER Working Papers 25556, National Bureau of Economic Research, Inc.
    5. Xiaobo Xu & Jiali Fang & Martin Young & Liping Zou, 2024. "The impact of post‐retirement financial market participation on retirement income sufficiency in Australia," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(1), pages 903-939, March.

    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:24226. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.