Almost half of U.S. households will be unable to maintain their current living standards—even if they work to age 65, a study by Boston College found.
Declining Social Security replacement rates and employers’ shift from defined benefit plans to 401(k) plans have led to 32% of people aged 51 to 61 being at risk.
That’s compared to 1992, when only one-fifth of those households were at risk of coming up short in retirement, according to the study, “Is There Really a Retirement Savings Crisis? An NRRI Analysis” by the Center of Retirement Research at Boston College.
Factors contributing to lower Social Security replacement rates include the increase in the average retirement age from 65 to 67.
1n 1992, the average retirement age for people between ages 51 and 61 was 65.2 years, but by 2004 it went up to 66.
The problem will likely worsen.
Currently, 35% of early baby boomers born between 1946 to1954 are at risk, as are 44% of late boomers born between 1955 and 1964.
Nearly half of Gen Xers face the possibility of a paltry retirement thanks to smaller Social Security benefits and increasing age longevity.