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Are you financially ready to retire?

Retirement is a recent innovation. For most of human history, people worked as long as they physically could. They still do in much of the developing world.

A new report from the National Institute on Retirement Security shows Americans have more in common with our third-world peers than we like to admit. Very few of us are ready to retire and many of us will not if this doesn’t change.

Without Social Security, almost no one will retire comfortably.

Given that Social Security’s long-term survival is far from certain, the fact that few people are saving enough for retirement ought to alarm everyone — young and old.

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The  National Institute on Retirement Security report looks at survey data the Federal Reserve collected in 2013. It is full of interesting analysis.

However, I want to zoom in on one particular point…

Collectively, we are simply not saving enough to fund retirement.

The median working-age household (age 25-64) has only $2,500 in retirement account assets.

That’s the median retirement balance — meaning that half of all working-age households have saved less than $2,500.

If we look specifically at people approaching retirement (age 55-64), the median retirement savings balance is only $14,500.

That is obviously not enough to let anyone stop working for 10-20 years or more.

Retirement experts suggest you need to save at least 4x your pre-retirement annual income to live a minimally comfortable retirement.

How many folks have done this? Not many.

Among the 55-64 age group, only 9.9% have that level of retirement savings. That means some 90% don’t.

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Roughly speaking, 90% of Americans born in the 1950s don’t have enough money to retire comfortably. That probably explains why so many Boomers are postponing retirement. They have little choice but to keep working.

This may not be so bad if you are healthy and you enjoy your work. The bigger problem is what happens when you physically can’t work anymore.

What then? I have a few suggestions:

First, postpone that day as long as possible by keeping yourself healthy. The right diet, lifestyle habits and exercise can help extend your working years into your 70s.

Second, be a smart consumer so you can save more money. Mathematically, spending less has the same impact as earning more. It is even better than earning more when you consider taxes.

Third, keep your savings safe and growing. Invest wisely, so your nest egg can earn as much as possible without taking excessive risk.

Fourth, turn Social Security to your advantage by applying for benefits at the optimal time. This can vary depending on your situation. My colleague Nilus Mattive has been writing about this on the Uncommon Wisdom Daily blog. Click here to add your voice to these important discussions.