Could Remote Work Delay Your Retirement?

An older woman who is a remote worker is on a video call with colleagues.

(Image credit: Getty Images)

You may dream of early retirement, but remote work can make extending your career a tempting option. It turns out that working later in life can have significant benefits for both your health and finances. If your employer is pressuring you to return to the office, or if you want to negotiate your way to a work-from-home (WFH) position, there's new data to show the advantages to you and your employer.

These benefits are not trifling. The Journal of Epidemiology and Community Health found that those who worked just a year beyond retirement age had a 9% to 11% lower risk of dying during the 18 years the research covered, regardless of health. And the National Bureau of Economic Research revealed that delaying retirement from 66 to 67 could increase retirement income by 7.75%.

For employers hoping to retain talent, older workers who can work remotely, at least part-time, are less likely to retire. That can save employers on hiring and training costs for new employees.

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Remote work opens the door to late retirement

Before the COVID-19 pandemic, only around 6% to 8% of employees worked remotely. The number of remote workers more than tripled in 2020, and although it has declined since, twice as many people now work from home compared to before the pandemic.

Remote work changed many aspects of life, but a new study from the Center for Retirement Research also revealed that it's making later retirement not just possible, but much more likely.

CRR used data from the Current Population Survey to determine the impact of working remotely on retirement. Researchers focused on people aged 55 and up who were employed and had no major health issues. The study controlled for the fact that remote employees often have higher salaries, do less physical work, and have more education. Still, CRR found that working remotely had a meaningful impact on retirement choices.

In fact, someone who works remotely was 1.4 percentage points less likely to retire compared with an employee in a similar position who commuted to the office. Based on the retirement rates of those included in the research, this reduction in the likelihood of retirement represents a 14.4% decrease.

Remote work had the third-largest marginal effect of any characteristic on the likelihood of retiring within the upcoming year. Astoundingly, working from home made an employee less likely to retire than a doubling of weekly earnings, working in a physical industry or having dependent children. Only working part-time or a spouse retiring played a bigger role in the likelihood of someone leaving their job.

Why does remote work allow for later retirement?

The Center for Retirement Research doesn't delve deeply into why working remotely makes someone more likely to stay on the job. However, researchers suggest "the flexibility and ease of commute offered by remote work could encourage late-career individuals to work longer and delay retirement. "

A considerable amount of other research shows that a shift to remote work has allowed more people with disabilities to find and maintain gainful employment. This could suggest that older workers are more likely to stay on the job if they develop health issues, when medical problems may have otherwise prompted retirement.

Remote work also opens the door to relocating without having to retire. Harvard Researchers assessing the impact of a 2012 work-from-home experiment found that workers who were older and closer to retirement age were more likely to relocate to retirement-friendly destinations in Florida and Texas once working from anywhere became possible.

If workers have more flexibility in when, where, and how they work; can save commuting time; and can live where they'd like, it's not a surprise that they'd be more amenable to staying at their jobs.

Regardless of the reasons, though, it's clear that remote work has an impact on retirement and that later retirement can have positive effects. Those nearing retirement age may want to explore the possibility of going remote if they're hesitant to give up their careers entirely, but want an easier workday as they approach their final day of work.

Christy Bieber is an experienced personal finance and legal writer who has been writing since 2008. She has been published by Forbes, CNN, WSJ Buyside, Motley Fool, and many other online sites. She has a JD from UCLA and a degree in English, Media, and Communications from the University of Rochester.