For many pre-retirees who are short of their retirement goals,delaying retirement by a few years is the first solution theychoose to building up their retirement income. But a new study bythe Employee Benefit ResearchInstitute (EBRI) finds that may not be as helpful aspre-retirees think.

According to the study, if boomers and Gen Xers delay their retirement past the age of 65, many of them stillwould not have adequate income to cover their basic retirementexpenses and uninsured health care costs. In fact, even if a workerdelays his or her retirement into their 80s, there is still achance the household will be “at risk” of running out of money inretirement.

However, the chance of success for retirement adequacy improvessignificantly as individuals reach their late 70s and early 80s. Amajor factor that makes a difference in a person’s ability to meettheir basic expenses and uninsured health care costs in retirementis the whether they are still participating in adefined-contribution retirement plan (such as a 401(k)) after theage of 65. Though percentage increases vary by several factors,defined contribution participation after 65 makes at least a 10percentage point difference in the majority of the retirementage/income combinations.

Since income before retirement is crucial to an individual’sability to be able to afford a comfortable retirement, the EBRIresearch looks at how working past age 65 affects differentpre-retirement income groups:

• Lowest preretirement income quartile: For those in the lowestincome group, only 29.6 percent of these households would havesufficient resources to avoid running short of money in retirement50 percent of the time; however, this increases to 34.6 percent ifretirement is deferred until age 67 and 46.5 percent if retirementis deferred until age 69. The incremental increase in thepercentage of households in the lowest preretirement incomequartile having at least a 50 percent probability of success levelsoff for several years (in large part due to the elimination of thedelayed retirement credits under Social Security) but then picks upagain after age 75. Approximately one-half (49.1 percent) of thelowest preretirement income quartile households retiring at age 75would have at least a 50 percent probability of success, but thatincreases to 61.7 percent at age 80, and 90.2 percent at age84.
• Second preretirement income quartile: For this group, less thana quarter (23.5 percent) of households would have a 70 percentprobability of adequate income if they retired at age 65. Thisincreases to 36.5 percent if they keep working to age 69.
• Third preretirement income quartile: For those households inthe next-to-highest income group, almost half (49.1 percent) wouldhave a 70 percent probability of adequate income if they retired atage 65. This increases to 60.5 percent if they keep working to age69.
• Highest preretirement income quartile: Three-quarters (75.9percent) of households in the highest preretirement income quartileare likely to have adequate income for retirement if they retiredat age 65. This increases to 81.1 percent if they keep working toage 69.