To attain your retirement goals, there are three basic strategies:

Save money during your working years

Plan to spend less during retirement

Work longer

It turns out that option No. 3 helps but may not be the panacea you're looking for, according to the Employee Benefit Research Institute.

Using data from millions of 401(k) participants and incorporating factors like longevity, investment risk and the potential for catastrophic health care costs, the institute crunched the numbers to determine whether working five years beyond the "normal" retirement age of 65 helps Americans reach their retirement goals. What they found was that those five extra years may not be enough for many Americans to retire comfortably.

The analysis looked at both income and age. As you might expect, projections for the lowest pre-retirement income quartile or tier are the most sobering. This group would need to defer retirement to age 84 before 90 percent of them would have even a 50 percent probability of achieving comparable pre-retirement living standards.

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The results improve with income levels, but even among those in the highest income quartile, 90 percent would have only a 50 percent chance of having enough to retire by 65. When broken out by age, the news is not much better: For one-third of households between ages 30 and 59 in 2007, working until age 70 won't provide adequate income in retirement.

All this aside, buried in the report is a glimmer of hope: Working longer does help. While only about half of households age 50-59 in 2007 could retire at 65, the number increases to nearly two-thirds if retirement age is increased to 70. Those extra five years have a dual effect: Not only do workers save more, but they also delay dipping into their retirement funds, which allows those funds to continue growing.

In a previous column, I extolled some of the nonfinancial benefits of working longer, specifically continued social interaction and intellectual engagement. A previous institute report confirmed that 92 percent of those who worked beyond the traditional retirement age of 65 do so because they want "to stay active and involved," and 86 percent say they "enjoyed working." The problem is that there are some real risks associated with relying on the "work longer" retirement plan, the most significant being: What if you lose your job?

Right now, the unemployment rate is 7.9 percent for all workers and only 5.9 percent for workers over the age of 55. But dig a little deeper, and the numbers aren't quite so rosy. While older workers are holding onto their jobs in large numbers, once they lose those coveted positions, it is very difficult to land a new one. According to a Government Accountability Office study, before the recession, "less than a quarter of unemployed older workers were unemployed for longer than 27 weeks. By 2011, this number had increased to 55 percent. Moreover, by 2011, over one-third of all unemployed older workers had been unemployed for over a year."

The data confirm that counting on working longer could be a dangerous assumption, which is why I prefer the combination of all three retirement savings strategies: Save during your working years; spend less during retirement; and work longer if you are able. Consider this approach a diversified way to reach retirement that allows you to weigh the practicality of each method. As the institute report notes, the trade-off of more saving today versus deferring retirement is an important factor to consider, but people should avoid "simplistic 'rules of thumb' that may result in future retirees, through no fault of their own, coming up short."

To get started on your retirement planning, I encourage you to use the institute's "Ballpark E$timate" calculator ( It's an easy-to-use, two-page worksheet that helps you quickly identify about how much you need to save to fund a comfortable retirement. Without a plan, you may be flying blind and relying on a work-longer strategy that you may not be able to execute.

Jill Schlesinger is the editor at large for and writes this column for Tribune Media Services.