The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.
The text below is an excerpt from the complete document. Read the full paper in PDF format.
Older adults' employment is attracting attention as many baby boomers approach traditional retirement ages. This fact sheet examines the benefits of working longer, the characteristics of today's older workers, and recent changes in older Americans' labor supply.
What Are the Benefits of Working Longer?
Choosing when to retire is a crucial decision for workers. Working longer increases lifetime earnings,
Social Security and employer-sponsored pension credits, and other savings, and shortens the period over
which retirement savings must be spread.
- On average, working an additional year increases annual retirement income about 9 percent (figure 1).
- Working an additional five years boosts annual retirement income about 56 percent.
- The impact is even larger for people at the lower end of the income distribution.
Boosting labor supply at older ages also increases government tax revenue.
- The government would raise about $180 billion in additional tax revenue in 2045 (measured in
2006 dollars) if all workers delayed retirement by one year, reducing the unified federal deficit by
an amount equal to 28 percent of the Social Security deficit (Butrica, Smith, and Steuerle 2006).
- Additional tax revenue in 2045 raised by delaying retirement 5 years would exceed $1 trillion,
more than 150 percent of the Social Security deficit.
Working longer may also improve emotional well-being and physical health.
- Because work is crucial to many workers’ personal identities, retirement can lead to a partial loss
of identity, especially for those who retire abruptly.
Work promotes social integration and social support.
- Staying active may promote physical health.
(End of excerpt. The entire paper is available in PDF format.)
Usage and reprints: Most publications may be downloaded free of charge from the web site and may be used and copies made for research, academic, policy or other non-commercial purposes. Proper attribution is required. Posting UI research papers on other websites is permitted subject to prior approval from the Urban Institute—contact firstname.lastname@example.org.
If you are unable to access or print the PDF document please contact us or call the Publications Office at (202) 261-5687.
Disclaimer: The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders. Copyright of the written materials contained within the Urban Institute website is owned or controlled by the Urban Institute.