You Can Work Till You're 80 and Still Run Short

By ALLISON BELL

Published 6/7/2011 

Even if Social Security makes good on benefits promises, and even if low-income workers keep working till they’re 80, about 38% of those low-income workers could go broke when they finally do retire.  

Researchers at the Employee Benefit Research Institute (EBRI), Washington, present that warning in a new analysis of data from EBRI’s Retirement Security Projection Model database.

The latest version of the database lets users study what will happen if householders defer retirement age past age 65.

The researchers consider whether individuals have a 50% chance of being able to meet basic retirement living expenses and uninsured health care costs.

Many workers – and some policymakers – are hoping workers can overcome gaps in public retirement programs and shortfalls in private savings by working past age 65.

One problem is that employers are not necessarily clamoring to hire and retain workers ages 65 and older, experts say.

Another challenge is that even workers who are able to work past age 65 may live long past age 65.

Workers in the top quartile of income have about a 76% shot at having adequate retirement income if they retire at age 65, and that percentage rises to 81% for top-quartile workers who keep working to age 69, EBRI researchers say.

Only 30% of workers in the lowest quartile have a 50% overall chance of having enough retirement resources. That percentage rises to 35% for workers who retire at 69, to 62% for workers who retire at age 80, and to 90% for workers who retire at age 84.

“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,” Jack VanDerhei, a report co-author, says in a statement about the analysis.

Access to retirement plan benefits can dramatically increase the likelihood that an individual will be able to afford retirement, VanDerhei says.