Study: Most U.S. Workers Are 'Unprepared' To Retire At 65

A new study out of Boston College is shedding light on the financial challenges facing American retirees.

The study found that fewer than half of current workers will have enough savings to retire at 65. But, the study found, the number improves dramatically if workers delay retirement to 70.

For Prof. Anthony Webb, of the Boston College Center for Retirement Research, it's "a good news and a bad news story."

"Most American workers are unprepared to retire at age 65, and that's the bad news that is well known," Webb said in an interview on WBUR's Morning Edition. "The good news is that if they work until age 70 — which I appreciate not all workers cannot do — then roughly 88 percent of workers ... will be able to maintain their pre-retirement standard of living."

"Working longer is a really powerful antidote to inadequate retirement savings."

Prof. Anthony Webb

In part, workers are unprepared to retire at 65 because 401(k) balances are not high enough. Webb said the average 55- to 64-year-old has a 401(k) balance of less than $100,000.

Despite the low 401(k) balances for near-retirees, Webb said "we really are, in relative terms, if not in absolute terms, living in a retirement golden age."

That's because, he said, older workers are more likely to be covered by a finally salary pension and Social Security benefits will be lower for younger workers as a result of the increase in the normal retirement age.

Webb's recommendation for unprepared near-retirees will likely come as unwelcome news.

"Working longer is a really powerful antidote to inadequate retirement savings," Webb said. In part, that's due to increased annual Social Security benefits for those who wait to cash in.

Webb added that he has "immense sympathy for people who ... simply cannot work beyond 62, [the age in which people can first claim Social Security benefits]."

But, he said, “the fundamental truth is that retiring is a largely irreversible decision, and you have to be very, very sure that you’re good and ready before retiring.”