NBER Working Paper
Some highlights -
Link to paper - https://www.nber.org/system/files/worki ... w24226.pdfThis paper compares the relative strengths of working longer vs. saving more in terms of increasing
a household’s affordable, sustainable standard of living in retirement. Both stylized households and
actual households from the Health and Retirement Study are examined. We assume that workers
commence Social Security benefits when they retire. The basic result is that delaying retirement by 3-6
months has the same impact on the retirement standard of living as saving an additional one-
percentage point of labor earnings for 30 years. The relative power of saving more is even lower if the
decision to increase saving is made later in the work life. For instance, increasing retirement saving by
one percentage point ten years before retirement has the same impact on the sustainable retirement
standard of living as working a single month longer. The calculations of the relative power of working
longer and saving more are done for a wide range of realized rates of returns on saving, for households
with different income levels, and for singles as well as married couples. The results are quite invariant to
these circumstances. …
Our primary conclusion is that working longer is relatively powerful compared to saving
more for most people. …
When we look at different rates of return on assets, different ages of retirement and at singles vs.
married primary earners, the general result remains that working 3 to 6 extra months has an
equivalent impact on the affordable sustainable standard of living as saving one percentage point
more for 30 years. Increases in saving that start later in life have a proportionately smaller
impact, increasing the power of working longer for individuals who are reoptimizing close to retirement.
I'm betting this is the excellent retirement planning advice that many Bogleheads don't want to hear.