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Do you need to delay retirement to age 70...or 84?

(MoneyWatch) Earlier this year, I wrote about a study from Boston College's Center for Retirement Research(CRR) that suggested the vast majority of households will be financially ready to retire by age 70, and that almost half of households could retire at age 65.

Not so fast, says the Employee Benefit Research Institute (EBRI). EBRI recently released a report that suggests that the lowest-paid quartile of workers will need to work until age 84 before the majority would have a 50/50 chance of success in retirement, and that the second-lowest paid quartile would need to work until age 81 to have the same odds. Those in higher-paid groups have a better chance of success: The top-paid quartile would need to work until age 65, and the second-best paid quartile would need to work until age 72 for a majority of people in these groups to have a 50/50 chance of success.

So what are the differences between these two studies? And do either of the results apply to you?

First, it's important to consider that the primary audience for these studies is policymakers and analysts at government entities, nonprofit organizations, and businesses; individuals planning their retirement aren't who these studies are aimed at. Policymakers and analysts need this type of analysis to determine if changes are desirable or needed in government and employer-sponsored retirement programs, and if they need to encourage additional levels of savings.

Second, it's important to realize that any study needs to make a number of assumptions regarding a variety of important factors, such as rates of return on retirement savings, levels of future contributions to retirement savings, the age when people begin drawing their Social Security benefits, how long citizens will live and so on. When reviewing the results of these studies, you need to first determine if these assumptions apply to your circumstances.

For example, the CRR study assumed that citizens would make optimal decisions regarding when to start drawing Social Security benefits and how to deploy retirement savings to generate retirement income, and that people would use their home equity to enhance their security in retirement. Actual experience suggests, however, that most people don't make the wisest choices regarding Social Security commencement and deploying their retirement savings, and that many people don't tap into their home equity to fund their retirement.

One key difference between the two studies is that the EBRI study takes the potential for high expenditures for medical and long-term care expenses into account, whereas the CRR study didn't. But long-term care is the wild card of retirement: If you incur long-term care expenses, your financial resources might get drained quickly, whereas you might fare quite well in retirement if you are lucky enough to escape these expenses.

One critical assumption that both studies make is that individuals and households will maintain the same standard of living in retirement that they did before retirement. "Maintaining the same standard of living" usually means having the same amount of after-tax income during retirement that you had while you were working.

But that just won't be the case for the vast majority of Americans, who will need to adopt some combination of working in their retirement years and drastically reducing their living expenses in order to have enough money to live on during their retirement. The number one strategy named by retirees for surviving in retirement is management of their living expenses, and both of these studies confirm that this strategy will be needed for future retirees.

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Both studies provide valuable insights to policymakers and analysts. But for individuals, the best advice I can offer is this: Don't draw conclusions about your situation from the headlines. Instead, do your own calculations to determine when you can afford to retire. Save as much as you possibly can. Put plans in place to address the threat of long-term care expenses to protect your retirement from blowing up. And take into account all of the levers you might need to pull to make your retirement successful, including the best time to start Social Security benefits and taking a long, hard look at your budget to see how you can reduce your living expenses.

When you've done the best you can to prepare for retirement, you'll feel more confident about thriving during the most important time of your life -- the rest of your life.

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