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Working Longer Cannot Solve the Retirement Crisis

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Abstract

Working longer is often proposed as the solution to the retirement crisis caused by older workers’ lack of retirement assets. Spreadsheet models used by advocates of delaying retirement assume older workers delay claiming Social Security to accrue additional benefits. But in reality, by age 65, most older workers have already claimed Social Security, often to supplement low wages, and working longer does not increase their Social Security benefits. Working longer increases retirement savings significantly less than predicted by spreadsheet models, which don’t reflect older workers’ real experiences in the labor market. Finally, the drastic job loss experienced by older workers in the wake of the Covid-19 crisis reveals the risk older workers face when working longer is the policy substitute for an effective retirement security system.

Suggested Citation

  • Teresa Ghilarducci & Michael Papadopoulos & Bridget Fisher & Anthony Webb, 2021. "Working Longer Cannot Solve the Retirement Crisis," SCEPA policy note series. 2021-01, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    • Handle: RePEc:epa:cepapn:2021-01
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    File URL: https://www.economicpolicyresearch.org/images/Retirement_Project/Love_or_Money_Policy_Note_FINAL.pdf
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    More about this item

    Keywords

    Covid-19; Public health; Social security; Working longer; Workers; Jobs; Unemployment; Risk; Older workers; retirement income; retirement; retirement savings;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • J83 - Labor and Demographic Economics - - Labor Standards - - - Workers' Rights
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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