With Americans living longer in retirement, results of an analysis released

last week show dramatically high percentages of Americans --- even in the

upper-income categories --- are likely to run short of money after 10 or 20

years of retirement.

The new analysis -- the 2010 EBRI Retirement Readiness Rating™  by the

nonpartisan Employee Benefit Research Institute (EBRI) -- finds that almost

two-thirds (64 percent) of Americans in the two lowest preretirement income

levels will be running short after 10 years in retirement.

However, the EBRI study also finds that after 20 years of retirement, almost

a third (29 percent) of those in the next-to-highest income level will run short

of money, as will more than 1 in 10 (13 percent) of those in the highest-income

level. Not surprisingly, those with the highest income are at the lowest risk of

running short of money --- but many in the highest income category still face

significant risks of not being able to pay basic expenses and uninsured medical

expenses for the remainder of their lives.

According to EBRI, this is the first time a national retirement model has

been able to project when different cohorts of Americans, based on age and

income, are likely to exhaust their retirement savings. For instance, it finds

that nearly half of early Baby Boomers --- those on the verge of retirement,

currently ages 56 to 62 --- are at risk of not having sufficient income to pay

for basic retirement expenditures and uninsured medical expenses, and nearly the

same fraction of "Generation Xers" are in a similar position.

Among other things, EBRI says the analysis provides the most detailed

estimates yet published of how age, relative level of preretirement income, and

eligibility for participation in a defined contribution plan (principally a

401(k) plan) affect the prospects of running short of money in retirement. It

also shows how long early boomers' resources are likely to last in

retirement.

Results appear in the July 2010 EBRI Issue Brief, written by EBRI Research

Director Jack VanDerhei and senior research associate Craig Copelan available at

http://www.ebri.org.  EBRI is a private,

nonprofit research institute based in Washington, DC, that focuses on health,

savings, retirement, and economic security issues. EBRI does not lobby and does

not take policy positions.