The costly retirement planning mistake most American workers are making right now

The trend of Baby Boomers postponing retirement

Barron's Associate Publisher Jack Otter on the economic impact from Baby Boomers working longer.

When it comes to planning for retirement, more than half of Americans are making a poor assumption — that they'll be able to still work during their golden years.

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Around 55 percent of Americans plan to work in some capacity while retired, according to an April study from the Transamerica Center. In reality, less than 10 percent actually wind up doing so.

Of that 55 percent, 14 percent plan to work full-time while 41 percent anticipate working on a part-time basis. According to Transamerica, however, just 7 percent actually wind up working in retirement, leaving them shortchanged when they need the money most.

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Instead, plans to continue working are hampered by the need to care for loved ones, a lack of appropriate job openings and/or health issues. It is also common for workers — for a variety of reasons — to be pushed into retirement earlier than anticipated.

In fact, while 54 percent of workers say they plan on working until age 65, the median average age for those who retire is actually 61.

So, what is the best way to circumvent the issue?

In short: don’t assume.

Retirement planners should not assume they will be working in any capacity during retirement and, thus, should not conclude they will have funds ready from that source.

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Instead, workers should plan on a full retirement and rely only on steady income sources: investments, Social Security, pensions and/or other retirement accounts.

And, if the option to work actually comes to fruition, then retirees will have extra cash on hand.