Longer, Healthier, Happier: Why Working Longer Improves Almost Everything

Abstract

Most Americans retire around age 65 because of a decision made in Germany more than a century ago. Today, this is not economically practical and fights human nature. While some people do happily and successfully retire before 65, many can’t, or don’t want to. This article looks at the gains from working longer. We argue that working longer produces more pre- and post-retirement income, more employer profits, higher tax revenue, and a more optimal social configuration. Using simulations, we show the improvement in incomes from working to various ages and at various levels of engagement. We present a solution. Laws, regulations, and other institutional factors, mostly put in place with good intentions to protect workers, keep employers and employees from negotiating individualized wage and hour agreements in older age, even when both would benefit. We advocate establishing a purely voluntary “unprotected class” into which any employee can opt, making both employer and employee immune from age discrimination lawsuits and other obstacles to these individually negotiated deals. It’s all upside for both parties, since nobody would ever be required to join the unprotected class.