Study: Retiring at 65 now harder

DES MOINES, Iowa (AP) - Workers in more than half of U.S. households will likely be unable to retire at 65 at the same lifestyle they enjoy today, a new study says.

The Center for Retirement Research at Boston College says its latest analysis of household financial status shows 51 percent are at high risk of falling short of having enough money in retirement. That's up from 44 percent in 2007.

The center's National Retirement Risk Index was developed with funding from Nationwide Mutual Insurance Co.

The index was first released in June 2006, when 43 percent of households were at risk of falling short of their preretirement standard of living. The measure was formulated using the Federal Reserve's 2004 Survey of Consumer Finances, a triennial survey of U.S. households, which collected detailed information on households' assets, liabilities and demographic characteristics.

In the past year, plummeting home values and investment losses in retirement accounts have combined to make matters worse.

"We are clearly facing a retirement crisis — one that will continue to grow as younger workers age," said the Center for Retirement Director Alicia H. Munnell, in a statement. "To overcome today's retirement challenges, people need help understanding financial topics so they can make reasonable financial choices throughout their lives."

To come up with the latest index results, the center used the Federal Reserve's 2007 Survey of Consumer Finances and factored in the $7 trillion decline in equity holdings and the $3 trillion drop in housing values over the past year.

Those two asset sources are key to providing workers with adequate retirement income today since most workers do not have an employer provided pension plan. Instead, they must rely on their own savings and home equity.

The center concludes that even if the stock market bounces back, home values are unlikely to return to pre-recession levels.

As Social Security's full retirement age moves to 67, life expectancy increases and retirement savings continue to remain at inadequate levels, the outlook will get worse over time, Munnell concluded.

Retiring won't become impossible, but it will require some thoughtful planning, said John Carter, president of Nationwide Financial Distributors Inc. Carter said many workers will need to save and invest more, reduce debt and work longer to maintain their standard of living in retirement.