Americans expect to retire earlier than ever, but nearly 40% of retirees can't afford to take care of themselves for just one year

• Thirty-six percent of older Americans can't afford one year of basic elder care, a Boston College study found.
• The share is higher for uneducated Americans, racial minorities, and unmarried women.
• The findings paint a bleak picture for the millions who retired early due to the COVID crisis.

Americans are retiring earlier than ever, but many won't be financially prepared.

Some exited the workforce during the pandemic because soaring stocks boosted their retirement savings. Some retired early because they lost their jobs and struggled to find new work. And as virus cases remain at elevated levels, some are just too worried about the pandemic to keep working.

Yet a recent study from Boston College suggests a large share of retirees can't really afford it.

Americans' odds of retiring before 62 rose to roughly 50% in July, according to a survey from the Federal Reserve Bank of New York. That's the highest reading dating back to 2014 and caps a steady decline in retirement age over the last several years.

But 36% of Americans aged 65 to 69 aren't able to cover just one year of minimal care, according to the study from Boston College's Center for Retirement Research. Only 21% of Americans can cover a year of severe needs, such as dementia or physically debilitating health issues.

The team's calculations include the need for paid and unpaid care. It also uses the median hourly rate for a home health aide for paid-care calculations, which totaled $22 per hour in 2018.

The ability to pay for elderly care also varies widely depending on marital status, education, and race and ethnicity, researchers Anek Belbase, Anqi Chen, and Alicia Munnell said in the September paper. While 31% of married people aren't able to cover a year of care, the share climbs to 33% for unmarried men and 56% for unmarried women.

College graduates are also much more prepared to cover care costs than less-educated Americans. Just 14% of people with college degrees can't afford a year of minimal care, according to the study. Conversely, 65% of those who never graduated high school don't have the means to pay for care.

And white Americans are generally much better equipped for retirement than racial minorities. Just 32% of white Americans can't cover minimal elderly care, according to the study. That jumps to 49% for Black Americans and doubles to 64% for Hispanic Americans.

The findings paint a bleaker picture of retirement at a time when millions of Americans - many unwillingly - have yet to return to the workforce. The labor force participation rate for Americans aged at least 55 years sits near 15 year lows after tumbling at the start of the pandemic, while the broader rate has staged a much more significant recovery. The data, along with booming retirement accounts, suggest many Americans were forced into early retirement due to the pandemic.

Many of those who haven't retired yet have done little to prepare. Twenty-six percent of non-retired Americans haven't saved a penny for their eventual exits from the workforce, according to a 2019 Fed study. That means a significant number of Americans didn't benefit from the stock market's boom through the pandemic recovery, and are likely to have little financial cushion if any by the time they retire.

With the pandemic now in its 19th month and the hiring recovery running on fumes, people who left the workforce are unlikely to come back. The country may still be rebounding, but the new study suggests millions of old Americans are entering a new phase of economic turmoil.