According to a recent survey by the Employee Benefits Research Institute (EBRI), more Americans are realizing they'll have to delay retirement because of inadequate savings and worry over Social Security's future. Will you have to push back your retirement timeline, too?

What's happening

The average American's retirement savings are coming up short, and despite a big run-up in the stock market, many Americans aren't contributing enough money to their retirement plans to ensure their future financial security.

A man struggles to calculate a budget.


In December, I wrote how more than one-third of all baby boomers have less than $50,000 in retirement savings, according to PwC, and that about half of would-be retirees are sitting on savings of $100,000 or less.

Frankly, those numbers are discouraging because baby boomers have been working for decades, and they're fast approaching the finish line, yet their savings aren't likely to cover their day-to-day expenses. Typically, advisors recommend retirees withdraw no more than 4% of their retirement savings annually to reduce the risk of outliving them. Someone with only $50,000 in savings, though, would only be able to withdraw $2,000 per year at that rate, and that's much less than they're going to need.

Today, Social Security income is mostly closing the gap between savings and spending in retirement, but Social Security's future financial stability is at risk because the program is paying out more to recipients than it's collecting in payroll taxes. The program has been outspending payroll tax revenue since 2010, and it's been making up the difference by tapping its trust fund. However, that rainy day fund is shrinking, and as more baby boomers retire, and the percentage of workers to retirees drops, Social Security's trustees estimate the fund will run dry in 2034. If so, it will force an across-the-board cut to retiree benefits of more than 20%.

Congress will probably take action to stabilize Social Security to avoid that drastic haircut, but changes that include pushing back the age at which people can claim their benefits, or capping how much money recipients can get based on other sources of income or savings, could still put a dent in the average retiree's finances.

Forcing changes

The average retired worker is pocketing $1,360 per month in Social Security income this year, and the average couple is receiving $2,260 per month in benefits, either because of spousal benefits, or because the couple is collecting benefits on two work records. That's not a lot of money, and given lackluster savings, and a risk of receiving even less benefits in the future, it's not surprising that some Americans aren't confident they'll be able to retire when they want to.

According to the EBRI's annual Retirement Confidence Survey, 14% of current workers changed the age at which they plan to retire last year, and 78% of those changes were increases. Almost half of people changed their retirement age forecast because they won't be able to afford retirement, and 46% cited a lack of faith in Social Security as a reason for their decision. Healthcare costs, higher cost of living, and a need to pay current expenses were also factors.

Although planning on working later in life may be the right solution for some, the reality is that most current retirees are retiring sooner than they had planned because of deteriorating health or job loss. Because it's difficult to predict your future health, or the likelihood of your future employment, pushing back your planned retirement age probably isn't your best retirement strategy.

If you're worrying about retirement, a better strategy is to spend the time determining how much money you'll need in retirement and then setting a realistic savings goal to reach your target. For most workers, reaching that target will require investing more money annually into a workplace retirement plan. Currently, people participating in these plans contribute about 6% of their income, but a contribution rate of between 10% to 15% could be necessary. If increasing your contribution rate into the double digits seems like too big of a challenge right now, increase your rate by 2% to 3% a year until you get there. It will be less burdensome on your budget, and it could help you avoid pushing back your retirement age.