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Half of all American households are not ready to retire, new research reveals.

The Center for Retirement Research at Boston College, Boston, published this finding in a new report. The Center’s National Retirement Risk Index shows that about 50% of U.S. households are not ready to retire, up from 30% in 1989.

But the report also finds that by working five years longer than the assumed retirement age of 65, the percentage of American households prepared to retire increases to 86%.

Separately, a paper from Prudential Financial Inc. (NYSE: PRU), Newark, N.J., outlines steps that individuals can take to boost their retirement preparedness, including:

  • Planning for the possibility of working a few years longer than the traditional retirement age of 65. Doing so has the triple benefit of delaying the receipt of Social Security by a few years to increase monthly benefits, earning wages and accumulating savings for a few more years, and drawing down on savings for fewer years in retirement.
  • Ramping up the rate of savings to increase the probability of retiring at age 65 or earlier.
  • Insuring retirement income against the risks of longevity and market uncertainty through guaranteed lifetime income products.

The paper encourages employers to consider helping workers achieve retirement security by:

  • Enhancing defined contribution plans by adding features such as automatic enrollment, automatic escalation of contributions and in-plan guaranteed lifetime income products that increase savings.
  • Encouraging employees to track their savings progress in terms of an income goal, rather than a savings goal, at a realistic target retirement age.

For financial advisors, the paper notes the importance of:

  • Developing an appropriate target retirement age that is customized for each individual.
  • Showing the positive impact that a few extra years of employment can provide in terms of increased financial security.
  • Framing the retirement planning in terms of future retirement income rather than a savings objective.

For policymakers, the paper highlights ways they can help Americans achieve a more secure retirement, including:

  • Creating safe harbors that address potential employer concerns regarding the addition of guaranteed lifetime income products to defined contribution plans.
  • Passing legislation that lets more employers offer a retirement savings plan in the workplace through Multiple Small Employer Plans.
  • Adopting proposed regulations that require defined contribution plans to project future monthly income on participant statements.