Inequities in the Golden Years: How Wealth Shapes Healthy and Work-Free Life

Abstract

Recent work has established that the gradient of life expectancy with respect to wealth is large and widening. We make three contributions to build on that result using two recent decades of data from the United States. First, the additional years are in healthy, disability-free years, indicating substantial gains for the wealthy. Second, the return to wealth in achieving these healthy years is increasing over two recent decades for all but the least wealthy quartile. Third, the additional years lived by the wealthy result in more years of work (and the most work-free years), exacerbating wealth inequality. The subjective expectations of individuals appear misaligned with the empirical findings, with the least wealthy reporting excessive optimism about life expectancy gains. These results inform the interactions of financial security in retirement with life expectancy, disability, and work; the progressivity of Social Security benefits; and the ability to manage longevity risk.

Keywords: wealth inequality, disability-free life expectancy, Retirement, work capacity