While one apparently obvious solution to the retirement crisis is simply to work longer, to continue to earn and save instead of drawing on paltry retirement accounts (if any), the Center for Retirement Research at Boston College took a closer look at the potential of such a "solution" to solve the problem.
Their conclusion? In a brief that examines a series of five studies to see whether such a solution is practical for the working population overall, CRR found that working longer is harder on those at the low end of the socioeconomic spectrum (SES).
So for that population, alternate or additional strategies may also be required to improve their prospects of a financially secure retirement. Educational achievement was used as the measure of SES.
Recommended For You
Researchers looked at whether it is reasonable to expect lower-SES individuals to work longer by examining recent patterns in life expectancy gains.
Their findings in this area suggested that working somewhat longer is reasonable, but since lower-SES individuals have not seen equal gains in life expectancy compared with higher-SES individuals, they looked further.
Lower-SES individuals don't currently plan to work long enough to achieve retirement security, which further complicates the question, with premature retirement presenting a problem for lower-SES households.
While voluntarily switching jobs does lead to a longer presence in the labor force, compared with those who simply stay in the same job, there aren't necessarily jobs for lower-SES workers to switch to.
Job options narrow as workers age past their prime working years, the report finds, and many of the jobs open to older workers are "old-person jobs," with lower salaries that make it hard to save more for retirement.
If the cost of health insurance can be lowered—since the actuarial cost of insuring older workers is approximately five times the cost of younger workers—that can expand options for those older workers to remain in the workplace.
The study points out that because of this discrepancy in cost, "states introduced initiatives beginning in the 1990s that imposed a 'rate band' limiting how much premiums could vary by age. Some even required 'community rating,' where age has no effect on the premium. These initiatives targeted the insurance market serving small employers."
However, considering the proposed changes to the health insurance market, such a strategy may no longer be viable—and findings revealed that it wasn't as effective as desired, with "the only significant effect … to increase the wages of workers with a high school education but no college" and "does not substantially improve the labor market outcomes of any SES group, with the possible exception of increasing wages for high school graduates."
So with it being tougher for lower-SES workers to stay in the workforce long enough to boost their retirement preparedness, other options are necessary and "policymakers may want to consider other alternatives to help shore up their retirement income security."
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
