If you’ve saved well enough to retire, but can’t quite decide which you’d enjoy more — retiring now or continuing to work — there’s a piece of research that suggests you might live somewhat longer if you keep working.
This only applies to men; working longer doesn’t seem to deliver a similar health boost for women.
Work longer, live longer
There is extensive academic research to support the notion that people who continue to work longer live longer. But is that simply because people who are healthier in their early 60s are able to keep working? It has been unclear whether the work itself leads to better health.
Now we know, thanks to the Center for Retirement Research at Boston College, that continuing to work in one’s early 60s does seem to increase the health of men.
Researchers were able to tap into a real-world database. For a few years beginning in 2009, the Dutch government offered a tax credit to workers (across all occupations) who were age 62 if they kept working into their mid-60s. Those who chose to keep working were then tracked for a few years to measure their mortality rate. The researchers were able to use the raw data to build a model in which they could eliminate the impact of other potential reasons people might stop working, such as income level and whether they didn’t like their job.
What they found is that the odds of dying within five years dropped from 8% to 6% for men who worked from 62 to 65. In practical terms, that only added two months of longevity during that stretch, but that was just for the short period studied (from the ages of 62 to 65). The researchers note that if there is a continuing effect of working just a few more years, men who work longer could end up living an additional two years.
And good health — in one’s working years and in retirement — greatly enhances life satisfaction.
Reducing the financial anxiety
In addition to the longevity boost, working longer for men — and women — is one of the most effective ways to squash financial worry demons. Every month, or year, you continue to work is a month or year where you can put off tapping retirement income sources.
The biggest payoff is for the highest earner in a household to wait until they are 70 to start receiving their Social Security benefit, rather than start at age 62. The benefit at age 70 is more than 75% higher than what you get at age 62.
If you’re still bringing in money, it also reduces the need to start taking withdrawals from retirement accounts. That effectively adds more time for the money to potentially grow, and reduces the amount of time in retirement you will need to rely on the money.
That isn’t to say you must work until your last breath. Someone who is 65 today has a 50% chance of still being alive in their mid-80s, longevity data shows. Work until 65 or 70 and there’s a good chance you’ll still have plenty of retirement years.
The mental payoff
If you know you will have a rich and busy retirement, and you’ve got the money stuff figured out, then retiring sooner might be right for you. But if you have come to rely on your work as both a job and as a social network, and as a place that gives you a sense of purpose on top of the paycheck, what’s the rush to retire?
You should, however, find ways to start layering in new activities and adding new social networks so when you do stop going to the office, you will have new hobbies and friends in retirement to focus on.
Give serious thought to how you might spend your retirement days. Not the first month or two. That’s all about decompression, and just enjoying being on your own schedule. But longer term, are there activities you are looking forward to having the time to enjoy?
A few years ago, a survey of recent retirees by TIAA found that people who were engaging in multiple activities were far more likely to report being happy than those with limited hobbies.
This is especially important for married men. Though typically it is the wife who becomes the surviving spouse, when men lose their spouses they are more prone to struggle emotionally for years, not just during the initial period of intense grieving.
Make it part of a plan
Just wanting to work longer doesn’t make it happen. The Employee Benefit Research Institute reports that while the expected median retirement age is 65, the actual median age when people stop is 62.
In EBRI’s 2021 survey of workers’ and retirees’ experiences, about one-third said they stopped working earlier than expected due to a health problem or disability (not related to COVID-19). Many illnesses and accidents are preventable, but not all. Working on your overall health/exercise/diet today is a retirement strategy that doesn’t typically get the attention of portfolio allocation. But it should.
In the EBRI survey, another 25% of participants said they stopped working earlier than expected because of “changes at their company.” Retiring rather than looking for other work is definitely easier in the short term. But you need to carefully consider if it works for you long term. Even a part-time job can be a help in getting your retirement plan to the finish line. And research suggests that for many people it brings happiness as well as a financial benefit.