The Illusory Benefit of Working Longer on Financial Preparedness for Retirement

Older workers with insufficient savings are advised to delay retirement. Using Health and
Retirement Study data, we compare outcomes of those who delay retirement, a possibly
select group, with the predictions of a typical spreadsheet model. Work to age 70 is
associated with an 18 percentage-point increase in the share financially prepared for
retirement, compared with a predicted 46 percentage points because most older workers
claim Social Security and retirement wealth barely increases. Drawing down retirement
wealth while working makes sense for most, because earnings are lower than post-retirement
income, in part because many older workers voluntarily work part time.