Working Longer Can Help Fund Retirement, But Many Can’t Do It

Staying in the workforce longer is, at least on its face, a simple solution to retirement problems: The more weeks a worker takes in a steady paycheck, the more cash he or she can store away for retirement.

But for a variety of reasons, this isn’t always possible, and a new study brief from the Center for Retirement Research at Boston College shows the strain is particularly difficult for people with lower socioeconomic status (SES).

Center for Retirement Research associate director Geoffrey T. Sanzenbacher and research economist Steven Sass analyzed a variety of existing studies and surveys to answer a few basic questions: How does a person’s socioeconomic status affect his or her ability to work longer, and are the mechanisms that can allow them to do so — job mobility and health care coverage, for instance — actually helping?


The researchers found a gulf between lower-SES workers’ career plans and their savings. For instance, using education as a barometer for socioeconomic status, the pair found that those in the lower two SES quartiles planned to retire before the age when they would attain the amount of money they needed — even when taking into account reverse mortgages, Social Security, and pensions.

“These findings suggest that premature retirement is a problem for lower-SES households,” Sanzenbacher and Sass wrote. “Perhaps one development that could convince workers to delay their retirement plans would be switching to a job better suited to working longer.”

But that, as the researchers found, also isn’t easy. While workers of all socioeconomic statuses benefit from job changes in retirement, the effect is weaker for those with less education: A late-in-life job switch leads to a 10.9 percentage-point increase in the odds that a better-educated person stays in the workforce until age 65, compared to just 7.5 points for those with less education.

In addition, they discovered that men with lower socioeconomic status had a significantly harder time finding work later in life than their female counterparts and those with more education.

“This series of studies indicates that while it is fair to expect lower-SES workers to work longer given rising life expectancies, it is also more challenging for them to do so compared to higher-SES workers,” Sanzenbacher and Sass concluded. 

But they emphasized that the findings don’t reject the idea that working longer can help folks of all ages improve their retirement picture; instead, the researchers suggest that policymakers explore ways to expand job opportunities to all later in life — as well as alternate income-security efforts outside of the working world.

Read the full report at the Boston College Center for Retirement Research.

Written by Alex Spanko