Planning to work until you’re in your 70s? Unfortunately, you still may not have enough money to retire on.
That’s according to a new study by the nonpartisan Employee Benefit Research Institute.
If Baby Boomers and Gen Xers delay their retirement past the age of 65, many of them still will not have adequate income to cover their basic retirement expenses and uninsured health care costs, EBRI said in the study.
Even if a worker delays his or her retirement age into their 80s, there is still a chance the household will be “at risk” of running short of money in retirement, the study said.
But, the chance of success in retirement improves significantly as individuals reach their late 70s and early 80s, EBRI found.
A major factor is whether workers are participating in a 401(k) or similar plan after the age of 65.
“Our research finds that many people may have to delay retirement far beyond age 65 to increase the probability that they have enough money to cover their retirement expenses at a comfortable level,” Jack VanDerhei, EBRI’s research director, said in a statement. “What really makes a positive difference, we found, is if people who continue to work after 65 also continue to contribute to a defined contribution retirement plan.”
As you’d expect, lower income workers are in worse shape.
For those in the lowest income group (bottom 25 percent), only 29.6 percent of households would have sufficient resources to avoid running short of money in retirement 50 percent of the time, EBRI said. But their situation improves if retirement is deferred — the longer the better.
At the top 25 percent of the income scale, EBRI said, three-quarters of households are likely to have adequate income if they retired at age 65. Of course, their situation also improves if retirement is deferred.
The report, “The Impact of Deferring Retirement Age on Retirement Income Adequacy,” is available by hitting the link provided.
How long do you think you’ll need to work?
What’s the main stumbling block to your retirement? Or, if you’re OK, any key suggestion for others?
- Henry Unger, The Biz Beat
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