Instead of working full time longer, some, like Sabedra, are thinking of working part time during retirement. The good news is, you don't have to strive to make big money. Even $10,000 or $15,000 a year in part-time income can help, says Warren McIntyre, a financial planner in Troy, Mich.
Here's why: Academic research has shown that investors can really afford to withdraw only 4 to 5 percent of their retirement savings--based on historic market returns--without risking depleting their accounts prematurely. So, say you need to withdraw $25,000 a year from your 401(k). But assume you have only $300,000 saved up in your retirement accounts. That would amount to an 8.3 percent withdrawal rate. Now, if you could earn just $10,000 a year working part time, you might need to withdraw only $15,000 from your 401(k). That works out to a much safer 5 percent withdrawal rate--one that might make your money last as long as you do.
For his part, Sabedra says he has already talked to his employers about "retiring" early at age 62 but working three days a week thereafter. "I don't plan on totally retiring," he says. "I'll always continue to work."
That could turn out to be the mantra for older boomers. For some, it will be because they want to work--but for others, because they have to.
GROWING THE NEST EGG
Account balances continue to grow as workers age, but 401(k) participation peaks with 50-somethings.
AVERAGE 401(k) ACCOUNT BALANCES IN 2004
20s $31,844 46.1 pct.
30s $63,710 66.4 pct.
40s $100,106 71.7 pct.
50s $129,218 72.3 pct.
60s $136,400 64 pct.
*Percent of eligible workers at each age who make contributions.
Sources: Investment Company Institute,
Employee Benefit Research Institute, Hewitt Associates