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For retirees, 70 may not be the new 65

It's become common--and comforting--wisdom: Those who haven't saved enough for retirement can significantly boost their income in their golden years by working until the age of 70, instead of the traditional 65.

Not so, counters a study released Thursday by the Employee Benefit Research Institute. "You're not going to magically be fine if you work a few more years," said Jack VanDerhei, research director for EBRI and author of the report.

EBRI's studies often sound a sobering note on this topic (See our MarketWatch colleague Robert Powell's take on a study from last year: "Many of Us Won't Be Able to Retire Until Our 80s").

Its latest study is noticeably less optimistic than a recent report by another influential research group, the Center for Retirement Research at Boston College. The center's report had found that 86% of households would be prepared to retire by age 70. That report also found a relatively small gap between the retirement readiness of low-income and high-income households. But EBRI's report concluded that about a third of today's households wouldn't be financially ready even if they worked to age 70.

VanDerhei said that the Center for Retirement Research analysis didn't factor in the prohibitively high costs of nursing home care, which typically isn't fully covered by Medicare and is only covered by Medicaid in some cases. His own methodology included the probability of nursing home expenses and arrived at a less optimistic conclusion.

It also projected a much bigger gap between rich and poor: While 90% of those making at least $72,500 in annual income would have a 50% chance of meeting their retirement income needs by age 65, those making $11,700 and below would need to work until 84 to have the same probability of success.

Neither study specifically defines the percentage of working income that a retiree would need to replace to be considered adequately prepared. (In an email, Andrew D. Eschtruth, communications director for the Center for Retirement Research, says, "Different methodologies will produce different results, but both studies agree that working longer will help improve retirement security.")

Many workers don't even have the luxury of delaying retirement. In EBRI's 2012 Retirement Confidence Survey, 50% of current retirees reported they left the workforce earlier than planned--because of health concerns for themselves or their spouse, changes at their company or other reasons. The bottom line for workers? "Bite the bullet and save the additional money," VanDerhei said.

EBRI's findings weren't all bleak, however: The study found that workers who participated in a 401(k) plan at age 65 boosted their retirement readiness by 20 percentage points.