Many boomers consider delaying their retirement

The volatility in the markets recently has forced many investors to delay their retirement dates. People who hoped to leave the workforce in their early 60s are now seriously considering working until age 70.

A recent Wall Street Journal article says that only 23 percent of workers age 55 and older have savings and investments of $250,000 or more. When you consider that a "safe" withdrawal rate in retirement is approximately 4 percent, even a $250,000 retirement account would only support $10,000 per year in inflation adjusted withdrawals. And we know that only one in four workers age 55 and older have that amount saved -- what about the other 77 percent? They had significantly lower account balances:

-18 percent had savings between $100,0000 and $249,999,
-16 percent had savings between $50,000 and $99,999,
- 7 percent had savings between $25,000 and $49,999,
- 8 percent had savings between $10,000 and $24,999, and
-28 percent had less than $10,000 saved.

So, a startling 60 percent had less than $100,000 saved for retirement. Using the same 4 percent safe withdrawal rate, investors with $100,000 in savings would have to limit withdrawals to $4,000 per year.

And, these days, investors can't even rely on their home values to supplement their retirement. So, what other options remain? The only real alternative appears to be working longer. Delaying retirement by even two or three years can greatly improve anyone's retirement picture. First, accounts can grow longer, and second, there will be fewer years of withdrawals. The Journal article quotes a study by T Rowe Price that determined that a 62 year old man earning $100,000 per year who had $500,000 in retirement savings could see his retirement income increase 6 percent for every additional year worked. That's a very noticeable difference.