If you're a baby boomer, the odds are high you'll exhaust your retirement savings after 10 or 20 years of retirement, according to the latest Retirement Readiness Rating report released this week by the Employee Benefit Research Institute.
Nearly 50% of older boomers -- those now aged 56 to 62 -- and some 44% of younger boomers -- aged 46 to 55 now -- are at risk of not having sufficient income to pay for basic retirement expenses and uninsured medical expenses, according to the study.
After factoring in health-care and long-term-care costs, the National Retirement Risk Index, or NRRI, produced by Boston College's Center for Retirement Research, finds that some 65% of American households are at risk of not having enough money to maintain their living standard in retirement, according to the NRRI.
The portion of Americans who plan to work past age 67 is higher than ever: a record 55% plan to work full- or part-time, up from 52% one year ago. And the percentage planning to work full-time past age 67 reached a new high of 28%, up from 19% one year ago.
There was also a sharp rise in workers who said they will need to work longer than planned because of the economic crisis. Roughly 65% said they will have to work more than 1 year longer, compared to 54% in the previous study. And 27% said they will have to work more than 5 years longer, compared to 24% in the previous study.
Many Americans are already working longer, be it to maintain their standard of living, stay mentally engaged or for the health-care benefits. Americans aged 65 and older in the upper income quintile now get about 40% of their income from working.
Saving more and perhaps reducing your standard of living now might be the only way to be reasonably certain you'll enjoy any standard of living later on.
According to EBRI, if you want to be one of the 9 in 10 households that maintains its standard of living in retirement, younger boomers in the lowest income quartiles will have to save, on top of what they already save, an additional +25% of compensation every year, while those in the in the third income quintile will have to save an additional +15% per year. Those in the highest income quartile catch a break and don't have to save any more.
BOTTOM LINE: As a nation, we are far from retirement-ready, so millions will have to prepare to live frugally or save more.
Saving more and perhaps reducing your standard of living now might be the only way to be reasonably certain you'll enjoy any standard of living later on.
According to EBRI, if you want to be one of the 9 in 10 households that maintains its standard of living in retirement, younger boomers in the lowest income quartiles will have to save, on top of what they already save, an additional +25% of compensation every year, while those in the in the third income quintile will have to save an additional +15% per year. Those in the highest income quartile catch a break and don't have to save any more.
BOTTOM LINE: As a nation, we are far from retirement-ready, so millions will have to prepare to live frugally or save more.
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