Study: Working Longer vs. Saving More

savebuttonbankHere’s a working paper titled The Power of Working Longer by Gila Bronshtein, Jason Scott, John B. Shoven, Sita N. Slavov which compares the effect of working longer (delaying your retirement date) and increasing your savings rate while working.

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.

Update: I read the full paper and here’s my view. For most household within 100% to 200% of median income, the effect of Social Security is going to be greater than their investment portfolio. What really matters is delaying Social Security and getting the resulting higher monthly income for life. For most people, that’s the same as working longer as they can’t just wait around without a paycheck.

If you are close to retirement, chances are that working longer is the best practical solution to improving your financial outlook. Working longer means your portfolio grows a bit more hopefully, your Social Security check gets bigger, and your retirement length gets shorter (annuities pay more).

However, if you are young, it is quite easy to tell yourself today that you’ll simply work a bit longer far in the future. When the time comes, you may not be given the option of working longer either due to job loss or disability. If you take this too far, you could just tell yourself that you’ll simply work until you die and you won’t have to save anything at all.

You can pay $5 for the full paper, or you may be able to get free access if you have a .edu or .gov e-mail address.

Keep Moving In The Right General Direction

compass200Here is some career advice by longtime Silicon Valley executive Ben Fathi in his post What I Learned from Working for Both Bill Gates and Steve Jobs. An excerpt (bold added):

What I can tell you as a piece of career advice is to only work on things you are passionate about. As long as you’re learning, keep at it. There is so much to learn and this industry moves so quickly that you will fall behind if you stop learning even for an instant.

As long as you’re moving in the right general direction, I used to tell people, it’s all good. Don’t try to plan out your entire road trip from New York to LA before you start out. (If I’d done that, I would have lived an entirely different life — never having even signed up for that first computer science class.) Instead, on your way to LA, just make sure you’re driving in a generally westerly direction, then keep going. And keep learning along the way, course correcting as necessary. You’ll eventually end up in the right place; and you’ll have a lot of fun along the way. I know I did.

You could make parallels between career and financial advice. Keep yourself moving in the right direction. As long as you’re learning, your career will progress. As long as you keep saving and investing in quality productive assets, your portfolio will grow over time. If you find something you don’t mind working feverishly on for 60-80 hours a week (ideally when you are young and don’t have a family to ignore), go for it. Add in some luck, and both your career and finances will be zooming along. If you aren’t zooming right now, don’t worry. Just keep moving forward in the right general direction.

Discover Card + Amazon 1-Click $10 Promotion


Updated. It looks like this offer is back as of February 2018. I was able to get another $10 credit even though I already got the previous $10 credit back in September. I still had the Discover card as my default 1-click payment method, but I did … [Read the rest]

Social Security Calculator Tool: Estimate Your Benefits


There are some (mostly young) skeptics, but Social Security should remain a major pillar of your future retirement income. For over 60% of current retirees aged 65+, Social Security makes up the majority of their income. Therefore, it may be … [Read the rest]

Recent Timeline of Stock Market Corrections


The currently-accepted definition of a "market correction" is a price drop of 10% from its peak. There have now been five corrections to the S&P 500 stock index since the bear market of 2009 (seven if you count the 9.8% and 9.9% drops). Here's a … [Read the rest]

Amazon Audible: Free Trial w/ 2 Free AudioBooks + $15 Prime Now Credit (New Members)


Amazon Audible has an targeted promotion with a free 1-month trial with 2 audiobook credits + $15 Prime Now credit (minimum $35 Prime Now order). This offer is only available to Prime Members who will be new Audible customers (not valid for existing … [Read the rest]

Hawaii Hilton Grand Vacations Package (Discount for Attending Timeshare Presentation)


If you're somewhere cold and dreaming of sunny Hawaiian beaches, I just got this e-mail from Hilton Grand Vacations for a discounted Hawaii vacation package if you attend their timeshare presentation. I appears to be open to all. Offer expires … [Read the rest]

Robinhood App Review: Free Stock Trades, Free Options Trading, No Minimum Balance


Updated. The Robinhood app just announced free Bitcoin trading, which expands their suite of services to the following: Unlimited free stock and ETF trades with no minimum balance requirement. Free options trading. No commission and no per … [Read the rest]

Affirm: Immediate Gratification + Hiding The Pain of Paying Upfront


Here is an interesting longform Racked article about Affirm micro-loans. Now, instead of (gasp!) saving up for a few months before paying cash for those $200 jeans, you could have them today for $235. It's basically credit card debt for people … [Read the rest]

Wyndham Hotels Promotion: Stay Twice, Get One Free Night at Any Wyndham


Wyndham Hotels has a new Stay Twice, Get a Free Night promotion. Wyndham Hotels is an interesting chain of hotels that includes Days Inn, Travelodge, Super 8, Howard Johnson, Ramada, Dolce, Wingate, and Wyndham Grand hotels. If you register here … [Read the rest]

Grubhub: $20 off $20+ For New Customers (Now $7 off $15)


(Update: At least for some folks, the promotion has been reduced to $7 off $15.) Here's a Grubhub promotion that will get you $20 off your first $20+ food delivery order. You must agree to accept promotional e-mails. *Valid for first time … [Read the rest]

Google Express: 20% Off Coupon Code (Both New and Existing Customers)


New code for existing users. Google Express has a couple of coupon codes that may be of interest: 5RTC4Q545 - $10 credit towards your first order (i.e. $10 off $10). This is my referral code and I will get a $10 credit. After joining, you … [Read the rest]