Many Americans will run short in retirement: study
By Lauren Keiper
BOSTON (Reuters) - No matter their income level, a significant number of U.S. workers are likely to struggle to meet basic expenses during retirement, a new study of baby boomers and "generation Xers" released on Tuesday shows.
Over 40 percent of people with the lowest incomes face prospects of depleted savings within 10 years after retirement, with that number climbing toward 60 percent after another decade, according to Washington-based Employee Benefit Research Institute (EBRI).
For many workers, having savings in a 401(k) plan or similar retirement vehicle can make the difference between security and struggle in retirement.
"How long you've been in a 401(k) plan is the number one thing showing if you'll have enough retirement income," Jack VanDerhei, EBRI's research director, told Reuters.
Higher-income workers are not totally immune to financial troubles down the road.
EBRI's retirement-readiness rating for 2010 showed that the two top earning groups face a significant, if smaller, risk of not being able to pay basic expenses and medical costs later in life. Nursing home costs sting higher earners in particular later in life, VanDerhei said.
The results are the latest wake-up call for policy-makers and households about the realities of modern retirement as millions of baby-boomers hit retirement age every year.
The warning comes despite improvements in retirement savings levels since 2006 when many employers adopted automatic enrollment guidelines for 401(k) plans, said VanDerhei. Continued...