One Surprising Way To Live Longer
When thinking about retirement, most of us see a “cold turkey” end to work. We just quit all forms of employment.
But is that the best way to enjoy a long life? According to recent research, the surprising answer may be no.
The Center of Retirement Research at Boston College (CRRC) recently published research that showed that working longer — instead of taking a full retirement — may result in a longer life.
The study, from the Netherlands, showed that the majority of men in the country were retiring early — until they were offered a tax break to keep on working.
“The tax break was the equivalent of a wage increase for all older workers in every sector of the Dutch economy,” the CRRC reported.
“The bonus started as a 5% tax cut for working people in the year they turned 62, increased to 7% at 63, and 10% at 64. After that, the rewards from work dwindled, falling to 1% for everyone over 67. (In 2013, the size of the tax break was reduced).”
Men who took the tax bonus lived longer on average. “While the policy did increase men’s life spans slightly, women seemed unaffected, because fewer of them responded to it by working longer.”
Why did men live longer if they continued working? The study doesn’t offer any solid conclusions since it doesn’t say if those who took the tax break were healthier than those who didn’t.
Still, there are implications for those considering retirement in the U.S. While the government doesn’t offer a direct incentive to work longer, you can receive a bonus for delaying Social Security benefits.
Although you can take Social Security as early as age 62, the Social Security Administration will boost your benefits every year until you reach age 70.
These delayed “retirement credits” depend upon age and lifetime income, but they can really add up. To understand the Social Security credit system, let’s start with the idea of “retiring early” at age 62.
At 62, you will automatically take a 30% cut in benefits from what you would receive a “full” retirement age, which, for most people is 66.
Let’s say you wait until collecting Social Security. Here’s the bonus in store for you:
— At age 67, you’ll get 108% of the monthly benefit because you delayed getting benefits for 12 months.
— At age 70, you’ll get 132% of the monthly benefit because you delayed getting benefits for 48 months.
Ideally, if you can wait until age 70 to collect benefits, you’ll get the maximum payment. While your decision largely rests upon your financial condition and health, it’s a great deal.
Once you receive benefits, they are indexed to inflation. Anything you pull out of a 401(k) is not, unless you roll over your balance into an inflation-adjusted annuity.
Will working longer — and waiting to collect benefits — make you live longer? I can’t answer that, but just waiting is well worth it from a financial sense.