KAI RYSSDAL: It is time once again for our economics editor Chris Farrell to help you sort out what is smart, what is stupid, and what's the Straight Story. This week, Chris, you're going to tell us if that retirement glass is half full or half empty?

CHRIS FARRELL: Well, Kai, I get asked this all the time, especially since survey after survey suggests Americans aren't saving enough for their golden years, right?


CHRIS FARRELL: All right. And here's the message: We can't stop spending. We buy
oversize homes, we need the latest gadget, we're maxing out our credit cards! So you get the picture.

Well, the latest of these reports comes from the Center for Retirement Research, Boston College. Now, the Center does terrific work. I really do like their work, and they warn that 43 percent of households risk being financially unprepared for retirement.

Well, here's the Straight Story: Despite all this, the retirement glass is half full, because working even a few years past the traditional retirement age can dramatically improve a family's finances.

KAI RYSSDAL: But I don't want to work past my traditional retirement age. That's
why they call it retirement, Chris, so you don't have to work.

CHRIS FARRELL: Well, there's a part in me that would like to abolish the term


CHRIS FARRELL: Because I think what we're really talking about is how do we redefine work? Work is a place not just where we earn an income, but that's where a lot of our social life goes on. So what I'd like to see, and I think what many people in retirement are moving toward, is a system where perhaps we don't really work so hard in our 40s and our 50s, but it turns out we are continuing to work in our 60s and 70s. And by the way, the impact on our retirement is fairly dramatic. This Boston Center study? They're creating this new national retirement risk index. If you retire at 67 instead of 65,
the number who are at risk drops from 43 percent to about 1/3.

KAI RYSSDAL: What is that measuring, though?

CHRIS FARRELL: The goal here is to maintain your pre-retirement standard of living in retirement.

KAI RYSSDAL: OK, alright.

CHRIS FARRELL: It takes a fairly complicated projection of all your retirement income, and then it compares that to a benchmark, and if you're 10 percent short of these projections, you are at risk. That's where they come up with the 43 percent. But they do say right there, you know, there is a silver lining in all this. Change age 65 to age 67, changes the picture.

KAI RYSSDAL: Alright, but a couple of things: One is, you know, we talked to a woman on the program a couple of weeks ago who had done a survey that showed a lot of people are actually being laid off, and so don't have that job available to them to work. Some people get sick or less able to work when they're 65, 67.

CHRIS FARRELL: There's a couple of things. I mean, first of all, there are people who are poor, and they're the ones, by the way, we should be concerned about. Because if you're poor in your working years, you're going to be poor during your retirement years. And that's a big concern. Health. All this assumes that you can maintain your health.

KAI RYSSDAL: There you go.

CHRIS FARRELL: Now, the other thing is, right now those people in their 50s who are being laid off, nobody wants to rehire them. So, yes, I am making a bet that as we go down the road, that employers are going to realize that all this skill and all this knowledge should not be walking out the door, particularly if you look at the size of our population going forward, and if you assume our economy's going to continue to grow, my own guess is the scarce resource is going to turn out to be labor, not capital.

KAI RYSSDAL: Do you think that anything would change in this discussion if we were just flat better about saving for retirement?

CHRIS FARRELL: Oh, a lot would be better, because there's another number from the same survey: We save 3 percent more. That eliminates a lot of your problem right there. But I do want to emphasize something, because it is hard for all of us to save.

KAI RYSSDAL: Yeah, you bet.

CHRIS FARRELL: Even people who make a lot of money, it can be very hard. What
studies like this show is there are two investments that are really critical: Your continuing education, because you mentioned employers. Are they going to want you? Well, if you're a well-educated employee, they are going to want you. And the second thing is network, because what we're really talking about is not staying in the same job for 40, 50 years. Oh, my God! I mean, can you just imagine? But trying different things, shifting careers, still being valuable. All this depends on an investment and a network of acquaintances and friends and colleagues. So that, to me, is the bottom-line message of all this: your health, your education, and your network. Those are three really critical investments over a long period of time.

KAI RYSSDAL: Healthy, wealthy and wise. The Straight Story from our man, Chris Farrell. Thank you, Chris.


Follow Chris Farrell at @cfarrellecon