Where you live correlates with old-age employment: Report

People who are financially unprepared for retirement often work past age 65 — but depending on where someone lives, that option isn't always available, new research suggests.

There are differences of as much as 20 percentage points in the employment rates of people ages 60 to 69 across different metropolitan areas, according to a National Bureau of Economic Research paper. That difference is seen in the 90^th percentile areas by employment compared with the areas in the 10^th percentile.

“Low-employment areas are systematically different, with a less educated and more diverse population, more low-wage jobs and import competition from China, poorer health outcomes and health care access, lower government spending and more income inequality,” wrote author Courtney Coile, professor of economics at Wellesley College. “Although these correlations are not necessarily causal, these factors collectively can explain about four-fifths of the geographic variation in employment at older ages.”

Coile analyzed data from the Census Bureau’s American Community Survey and other sources for 1990, 2000, 2007 and 2018 for the paper, which was published in October. The paper looks at "commuting zones," of which there are 741 across the country, compared with more than 3,000 counties, according to the paper. Data from 2007 were used instead of figures from 2010 in order to avoid the effects of the Great Recession.

Several regions have higher employment levels of older workers, the author noted.

“There are clusters of higher employment in particular regions, particularly the Midwest down to Texas, the northeast and southeast coast, and the northern Rocky Mountains, but there are also numerous instances of large differences in employment in adjacent commuting zones,” Coile wrote.

For people who have saved too little for retirement, especially the economically vulnerable, that can matter.

“Several studies suggest that working longer is the best means of raising one’s standard of living in retirement,” the author wrote. “People for whom working longer is not feasible or desirable may face an increased risk of financial insecurity and poverty in old age.”

The findings have implications for policy, Coile said.

“In sum, it seems clear that place does affect employment at older ages,” the paper read. “Collectively, this evidence has led some analysts to suggest that it may be time to challenge the conventional wisdom that ‘relief is best targeted towards poor people, not poor places’ and reconsider place-based policies.”

Numerous companies provide annual rankings of the best states to retire, often based on factors such as affordability, weather, health care and overall standards of living.

Last month, Magnify Money published a list of the states with people 65 and older best positioned for retirement. That report included factors such as poverty rates, housing costs, homeownership rates and percentages of older adults who have retirement income.

The leading states, according to that report, are Utah, West Virginia, Wyoming, Iowa, Idaho, Delaware, Michigan, Kansas, Indiana and Virginia. Conversely, the states ranked lowest for people 65 and older being prepared to retire are California, the District of Columbia, Nevada, New York, Massachusetts, Rhode Island, New Jersey, Georgia, Hawaii and Connecticut, the company stated.