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July 09, 2014 at 11:19 AM
Older pre-retirees are furthest from being retirement-ready, according to a recent analysis by BlackRock and the Employee Benefit Research Institute.
The younger the retiree, though, the better it looks.
According to the study, 55-year-olds with median income and retirement savings are on track to replace 69% of their pre-retirement income. Based on the idea that retirees will need to replace about 80% of their income in retirement in order to maintain their standard of living, these 55-year-old median workers are falling 14% short.
For older pre-retirees, the gap gets wider.
The study found that 64-year-olds with median income and retirement savings will be able to replace only about 59% of their income, less than 60-year-olds who have the potential to replace about 64%.
“U.S. workers closest to retirement, and with the least amount of time left to bulk up their savings, are the ones who have the most work to do,” wrote Chip Castille, head of BlackRock’s U.S. Retirement Group, on BlackRock’s blog.
BlackRock focused on people in their last decade before the traditional retirement age of 65 that have the two primary sources of retirement income, Social Security and retirement savings, usually 401(k) plans and individual retirement accounts.
“The 26% gap that the median 64-year-old faces to replace 80% of pre-retirement income is more daunting,” wrote Castille. “And for workers who expect to make up at least some of the difference by staying on the job past age 65, it’s important to note that EBRI’s 2014 Retirement Confidence Survey has found that 49% of retirees left their jobs earlier than they had planned.”
