For Many Hopeful Retirees, 70 May Not Be the New 65 After All

older workersBy Steven Kutz

It's become common -- and comforting -- wisdom: Those who haven't saved enough for retirement can significantly boost their income in their golden years by working until the age of 70, instead of the traditional 65.

Not so, counters a study released Thursday by the Employee Benefit Research Institute. "You're not going to magically be fine if you work a few more years," said Jack VanDerhei, research director for EBRI and author of the report.

EBRI's studies often sound a sobering note on this topic (See our MarketWatch colleague Robert Powell's take on a study from last year: "Many of Us Won't Be Able to Retire Until Our 80s") .

Its latest study is noticeably less optimistic than a recent report by another influential research group, the Center for Retirement Research at Boston College. The center's report had found that 86% of households would be prepared to retire by age 70. That report also found a relatively small gap between the retirement readiness of low-income and high-income households. But EBRI's report concluded that about a third of today's households wouldn't be financially ready even if they worked to age 70.

VanDerhei said that the Center for Retirement Research analysis didn't factor in the prohibitively high costs of nursing home care, which typically isn't fully covered by Medicare and is only covered by Medicaid in some cases. His own methodology included the probability of nursing home expenses and arrived at a less optimistic conclusion.

It also projected a much bigger gap between rich and poor: While 90% of those making at least $72,500 in annual income would have a 50% chance of meeting their retirement income needs by age 65, those making $11,700 and below would need to work until 84 to have the same probability of success.

Neither study specifically defines the percentage of working income that a retiree would need to replace to be considered adequately prepared. (In an email, Andrew D. Eschtruth, communications director for the Center for Retirement Research, says, "Different methodologies will produce different results, but both studies agree that working longer will help improve retirement security.")

Many workers don't even have the luxury of delaying retirement. In EBRI's 2012 Retirement Confidence Survey, 50% of current retirees reported they left the workforce earlier than planned-because of health concerns for themselves or their spouse, changes at their company or other reasons. The bottom line for workers? "Bite the bullet and save the additional money," VanDerhei said.

EBRI's findings weren't all bleak, however: The study found that workers who participated in a 401(k) plan at age 65 boosted their retirement readiness by 20 percentage points.

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Why didn't our Government "invest" the SSI funds at the *8-10 % ROR that they love to refer to. If they had not stolen the the funds and taken care of every Johnnie come lately immigrant the fund would be enormous and self perpetuating. Watch out fellow Bay Boomers...the Politicians are about to raid our retirement funds via taxation, low interest and our soon to worthless Fiat currency that is close to make believe in value. In essence our whole financial system is a gigantic ponzi scheme. It matters not who gets elected.....they are all in league with our real Masters the foreign Jew Bankers.

September 05 2012 at 5:34 AM Report abuse +1 rate up rate down Reply

If you vote republican in this coming election you are voting to end social security and medicare. I am sure most of you americans can get along without social security and medicare in your retirement. Thank god for the democrats to preserve this benefit for being an American.

September 05 2012 at 3:38 AM Report abuse +2 rate up rate down Reply

Life has a funny way of sticking it to almost everyone. If you live frugally and save - you end up sickly and die young. If you spend like a drunken sailor you live to be broke til a hundred. On this we can rely: No one gets out alive. Life is a biotch and you cannot take it with you. People make plans and life laughs.

September 05 2012 at 12:18 AM Report abuse +3 rate up rate down Reply

You work till 76 for a male and 78 if you are a female. It is all well because you will most likely be dead in a year or 2 after that!

September 04 2012 at 11:13 PM Report abuse rate up rate down Reply

remove contribution cap towards social security, it will save social security.

revise 401k - make it after tax, no age requirement for increased contribution, no forced withdrawal, let it stay with the funds and let it grow, only for owner's to withdraw when needed. this will motivate people to save more and provide a feeling of security towards their retirement days.

September 04 2012 at 10:26 PM Report abuse +4 rate up rate down Reply
2 replies to letmay8's comment

LOL, social security is weaker than ever after having 2% removed from the employee contributions for at least 2 years... with the expectation that the tax break will continue for at least another year.

September 05 2012 at 1:12 AM Report abuse rate up rate down Reply

With respect: If the government is not forced to remove our Social Security Money, from the General Fund and return it to the Social Security Fund, NOTHING WILL CHANGE!

Democrat President L.B.J., told the American people that there was so much money in the Social Security Fund, That It Could NEVER BE DEPLETED - He and His Congress, Then TOOK OUR MONEY & Put Our Money Into The General Fund, Where Every President & Every Congress, Since That Time Have Chosen To SQUANDER OUR RETIREMENT MONEY. Now they must be required to return our money to the S.S. Fund. They must also be required to return all the ill gotten gains they made by engaging in INSIDER TRADING, to the American People. Both Parties, signed N.A.F.T.A., into law and all our production jobs went off shore. Where did these highly educated, ivy league types, who think themselves to be our betters think their tax base would come from once all the worker bees no longer had JOBS?

Our children can have as many degrees as can be had and yet, they are unable to find employment. Wonder if this is what our politicans think of as the "New Normal?Why should American Citizens Be PUNISHED - For Following The Laws of This Land and Because Our Politicans Chose To Spend OUR RETIREMENT Money ?

September 05 2012 at 4:03 PM Report abuse rate up rate down Reply

Remember when you vote republican you are voting to end social security and medicare. Are you financially funded to pay for your own health care insurance? The democrats have my vote this election.

September 04 2012 at 10:17 PM Report abuse +4 rate up rate down Reply

This is just another trick to steal ALL your Social Security funds.
The average man only lives to be 70 years old. That means he will probably die before he draws one dime Social Security. The average woman only lives to be 75.


September 04 2012 at 10:09 PM Report abuse +1 rate up rate down Reply
2 replies to drdjchapman's comment

let's get this right 76.5 for males and 78.5 for females

September 04 2012 at 11:10 PM Report abuse +1 rate up rate down Reply

Of course, you realize that at the time SS was set up the life expectancy was well below 65? In fact, my stepfather died at age 63 without collecting one dime of the money he paid into the system.

September 05 2012 at 1:13 AM Report abuse +1 rate up rate down Reply

If you are waiting to get rich on Wall Street, you probably won't unless you are a stock broker. Wall Street used to return an average of 8% a year. Get rich quick plans? Wait for Bernie to get out of prison in about 150 years. My advise. Vote Democrat. Repeal Taft Hartley. Join or form a strong union and negotiate for higher wages and a defined benefit pension plan. I retired at 67 with a defined benefit pension plan and particially funded 401K (some of it is in foreign investments because some foreign countries actually have adults running their country) plus Social Security, Medicare and Veterans Benefits if I need them (it's a little late for some of you middle aged draft dodgers to go to Viet Nam so no Veterans Benefits for you.

September 04 2012 at 9:50 PM Report abuse +2 rate up rate down Reply

Frugality has been constant in my life. I can get sixteen plus inch thick boneless pork chops out of a whole pork loin which I only buy when it is on sale. Learning how to buy in bulk, properly package meat and other foods and managing a freezer has always been central to being able to feed myself and my kids good food. Junk food is something that may seem cheaper than cooking at home, but it is not. For years I brown bagged it at work and now when I travel I take along food for the trip. I live alone now, but I still buy in bulk and only when the items I use are on sale. I make my own soups (actually I have to cook everything from scratch because of a bizarre bladder condition) stews, cassaroles and put them up in individual servings. If I want to feed more than myself, I can do it easily. Frugality just requires thinking a week, a month, 3 months ahead. Writting dates on things like detergent can tell you how long it lasts. It can be a puzzle you solve better the more often you do it--

September 04 2012 at 9:46 PM Report abuse +3 rate up rate down Reply

How about 75, 80, just vote republican. Are you a multimillionaire? If not, forget about retiring.

September 04 2012 at 8:44 PM Report abuse +2 rate up rate down Reply
1 reply to richard's comment

Republicans feel that because only they believe in God, that they do not have to concern themselves with pensions, social security, the price we pay for instigating wars, the price we pay for lack of health care access and a myriad of other social problems. They are irresponsible and selfish people. They are the party of mean.

September 05 2012 at 12:24 AM Report abuse rate up rate down Reply