Part of the American dream has been the expectation that hard work would lead to retirement at 55. Over the years, politicians have deferred the dream for most Americans, by pushing retirement age back to 62-65 for most people today. But with the sharp decline in wages and loss of jobs for most Americans, the likelihood of retiring at 65 now looks remote for most Americans who see the only option as saving more, investing more aggressively, and working longer.
According to the Employee Benefit Research Institute, Americans will have to work well into their 70s and 80s to afford retirement, according to the study, titled “The Impact of Deferring Retirement Age on Retirement Income Adequacy.” Those who earned (on average over the course of their careers) less than $11,700 per year, the lowest income quartile, would need to defer retirement till age 84 before 90% of those households would have just a 50% chance of affording retirement.
Those who earned between $11,700 and $31,200 will need to work till age 76 to have a 50% chance of covering basic expenses in retirement. Those who earned between $31,200 and $72,500 will need to work to age 72 to have a 50% chance and those who earned more than $72,500, those in the highest income quartile, catch a break; they get stop working at age 65 to have a 50/50 chance of funding their retirement.