Working Longer Is More Powerful than Saving More

Yadda, yadda, yadda...you've heard it all before. Work longer, claim Social Security benefits later, and you will have more money in retirement. You may have heard it before, but you haven't seen evidence as convincing as this. A National Bureau of Economic Research study computes the power of working longer relative to saving more, and it's mind boggling...

• Let's say you're relatively young and want to increase your standard of living in retirement. So you decide to save more in your 401(k). You save 1 percentage-point more for 30 years. How much longer would you need to work to equal 30 years of additional savings? Three months. 
• Let's say you're relatively old and want to increase your standard of living in retirement. So you decide so save more in your 401(k). You save 1 percentage-point more for 10 years. How much longer would you need to work to equal 10 years of additional savings? One month.

There are a number of assumptions and a flurry of calculations behind these numbers, of course, but the bottom line is this: "Our primary conclusion is that working longer is relatively powerful compared to saving more for most people."

Source: National Bureau of Economic Research, The Power of Working Longer, Working Paper 24226 ($5)