Thursday, November 30, 2017

New article: “Is Working Longer A Good Prescription for All?”

The Center for Retirement Research at Boston College has released a new Issue in Brief:

“Is Working Longer A Good Prescription for All?”

by Geoffrey T. Sanzenbacher and Steven A. Sass

The brief’s key findings are:

  • Working longer is an effective way to boost prospects for a secure retirement, but is it realistic for workers across the socioeconomic (SES) spectrum?
  • The Center examined this question in a series of studies funded by the Alfred P. Sloan Foundation, using education as the measure of SES.
  • Given rising life expectancies, the analysis finds that it is reasonable for lower-SES workers to work somewhat longer.
  • However, it may be harder for them to extend their worklives, as they plan to retire earlier and face narrower job options than their higher-SES counterparts.

This brief is available here.

1 comment:

WilliamLarsen said...

"Lower-SES
workers have relatively low planned retirement ages even though they need to work longer than other groups to attain retirement security. And while moving
from one job to another appears to allow them to extend their careers, the effect is somewhat smaller than for higher-SES individuals. Finally, while job options for older workers seem to have broadened since the late-1990s, allowing easier job movement and thus longer careers, less-educated men still face narrower options than their better-educated counterparts."


In summary less education leads to lower wages, which leads to lower savings rate, which leads to less assets at time of retirement. Working longer reduces the number of years assets must support a person. Less education may also be the reason why the less educated may not save enough. They do not understand nor have the ability to calculate what they need to save in order to retire.

What is missing is what is the potential of a low wage earner to save. I know many highly educated people who wait to save and then save to little. Would low educated people be any different?

What would be interesting to review is how much is actually needed as a percent of wages saved to secure a retirement. It should be the same percentage regardless of income if your goal is to replace a % of income in retirement.

How many from all groups save the needed percentage? A high income worker who save too little as a percent may only need to cut back on what all others would call extravagance. Again what is the needed percentage and what do the low, mid and high wage earners save?