All in Retirement Planning

Study Shows Delaying Retirement May Increase Longevity, Especially for Men

In October, the Center for Retirement Research at Boston College published a research paper showing how policies in the Netherlands that delay retirement can increase longevity, especially for men. The working paper, “How Does Delayed Retirement Affect Mortality and Health?” was written by research economists Alice Zulkarnain and Matthew S. Rutledge. The authors observed that older Americans have been retiring later for a number of reasons, including because work is becoming less physically demanding, employers have shifted from defined benefit to defined contribution pensions, and Social Security’s incentives are changing. The researchers cautioned, however, that understanding the implications of working longer for mortality and health is complicated, because people who are healthier tend to work longer than people who are less healthy.

Taking advantage of a natural experiment in which a policy was implemented in the Netherlands that incentivized a broad cohort of early baby boomers in their sixties to delay retirement, the study used Dutch administrative data to explore the links between work and health outcomes related to depression and diabetes, applying an instrumental variable approach that took into account the joint relationship between work and mortality.

The findings showed that delayed retirement reduced the five-year mortality rate for men ages 62-65 by 2.4 percentage points, which represents a 32% reduction relative to the five-year mortality rate for non-working men of the same age. For women, the results were inconclusive.

Moreover, the study found no significant relationship between delayed retirement and health conditions like diabetes or depression, which suggests that these conditions were not responsible for the mortality reduction. The researchers speculated that this could be because depression and diabetes are not as acutely life-threatening as some other conditions, adding that further research is needed to identify the conditions through which the positive effect of working on mortality manifests itself. They also pointed out that the relationship between working and mortality could manifest itself through a variety of conditions, which may make it difficult to find a significant result for any one condition.

In some ways, the U.S. already has a delayed retirement incentive with the Social Security benefits program. That’s because every year someone delays taking their Social Security benefit beyond their stated full retirement age, they get an 8% annual increase every year until age 70.

From a financial planning standpoint, working longer is one of the main ways someone can exercise control over whether or not they outlive their money. One takeaway I offer, is set yourself up to do work you enjoy. It’s much more likely that you will work longer if you have a sense of fulfillment or enjoyment in the work you do. And, if you begin putting steps in place to transition to work you enjoy now, it’s more likely that you will make the leap successfully when the time comes.  

#AquilaWealth Newsletter -- No. 1 #IRA Mistake, Productivity Recommendation, and Jet Lag

I like to send out a newsletter to my clients and friends every-other week on Thursdays at 2 p.m. PT. I typically include 3 articles with my commentary around the topic of personal finance. Here are the ones I like this week, and I think you will too. (Feel free to email me at eric@aquilawealth.com if you want to be added to my email newsletter list.)

#1 The No. 1 IRA mistake

#2 Productivity Recommendation: Take the Kolbe A™ Index/Instinct Test

#3 The Scientific Secrets to Preventing Jet Lag

Countdown to Retirement: Strategies for Saving in Your 50s #retirement #aquilawealth

Strategies for saving in your 50s

Many retirees today are redefining the “golden years.” Forget about endless days of leisure. Retirees seek adventure, travel, and new business pursuits. While these changes may redefine retirement, will retirees be able to finance their plans? Today, many people age 50 and older have not begun to save for retirement or have yet to accumulate sufficient funds.