The Color of Money

Working longer may not work out

By Michelle Singletary
The Washington Post / August 14, 2011

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I’ve been looking forward to retirement since I worked for that first manager who got on my nerves decades ago.

But lately I’ve been wondering if all of us have done ourselves an injustice by dreaming of idyllic retirements that require much more money than we could possibly ever save or invest.

Maybe we shouldn’t be aiming so hard to retire in our mid-60s (or even earlier). Maybe we should embrace the fact many of us will have to work well into our 70s.

A survey by First Command Financial Services found almost half of respondents said they plan to work into their 70s. Those participating were 25 to 70, with annual household incomes of at least $50,000.

Seventy-six percent who haven’t retired yet said they are likely to consider working at least part-time when they do retire. Many said they planned to work longer because they needed the income. Some who said they have sufficient savings wanted to keep working so they could delay pulling from their retirement nest egg for an idle period that could last for 30 years or more.

So there you have it. If you want to be secure for retirement and your savings are nonexistent or going slow, just work longer into your senior years, right?

Not necessarily so, says the nonpartisan Employee Benefit Research Institute (EBRI). Many baby boomers who delay their retirement past age 65 still won’t have enough income to cover their basic retirement expenses and uninsured health care costs.

Recent research by EBRI found that even if a worker delays his or her retirement into their 80s, there is still a chance he or she will not have enough money in retirement.

In 2003, EBRI created a retirement security projection model to assess people’s retirement income prospects. The 2011 version added a new feature, which allows households to see whether delaying retirement past 65 could help meet their income needs. The model found that 84 is the age at which 90 percent of low-income households would have a 50 percent probability of having enough retirement income.

Here’s what EBRI found:

■For those in the lowest income group earning zero to $11,700, only 29.6 percent would have sufficient financial resources to avoid running short of what they need in retirement 50 percent of the time if they retire at 65.

■ For people earning $11,701 to $31,200, less than one-fourth would have a 70 percent probability of adequate income if they retired at age 65.

■For those households earning $32,201 to $72,000, almost half would have a 70 percent probability of adequate income if they retired at age 65.

■ Three-quarters of households earning $72,001 and higher would have a 70 percent chance of having adequate income if they retired at age 65.

So if working well into your golden years is your Plan B, think again.

It always comes back to the same, tired but always-prudent advice. Save as soon as you can and as much as you can.

Michelle Singletary, a columnist for The Washington Post, can be reached at