Retirement at 70 Now? Not So Fast.
In the past, most workers figured they’d be able to retire at the age of 65. But following 2008′s financial crisis, the idea of working a few more years to recoup lost savings became commonplace.
Data from the Employee Benefit Research Institute, however, shows that delaying retirement doesn’t always help solve income shortfalls for those who are at risk.
Among those in the highest income quartile, 90% have only a 50% chance of having enough to retire by 70.
The numbers get more depressing as you move down the income ladder. Those in the second-highest quartile will need to hold off on retiring until 72 to have the same odds of having adequate income. Workers in the lowest pre-retirement income quartile will need to stay on the job until age 84 to make their nut.
EBRI’s analysis of a sample of Americans age 50 to 59 in 2007 not only weighed auto-enrollment in 401(k) plans, auto-escalation features for contributions and the increased use of target date funds but also accounted for longevity risk, investment risk and the risk of major health care costs.
Longevity risk and health costs are the biggest factors hampering retirement readiness, according to EBRI. To determine the impact of long-term-care costs and longevity risk, researchers modified their results to ignore those factors. That allowed 73% of the subjects to be ready for retirement by 65, rising to 84% by age 70. When accounting for health expenses and longer lives, only about half of that age group was considered ready to retire at age 65.