One demographic that needs to work later in life may instead be retiring too soon.
Those in the lowest income bracket—the bottom 25% of earners—are more likely to retire before they accumulate the means to live without a steady income, according to a new study from researchers at Boston College’s Center for Retirement Research.
The study used education as a metric for socioeconomic status. For all income brackets, it found that there was a “retirement gap,” or a time differential between how long households planned to work and how long they needed to stay in the work force in order to maintain their pre-retirement standard of living.
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Even after controlling for demographic and financial characteristics, households with incomes in the bottom 25% had the largest retirement gaps. While 54% of households in the lowest quartile of incomes had a retirement gap, just 36% of those in the top 25% of earners had such a gap.
The struggles of lower-income workers are amplified by relatively poor health and job prospects, which may make it more difficult for them to work longer, the study pointed out. Indeed, the results “suggest that the big problem is premature retirement among low-SES [socioeconomic status] households.”
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“It may well be that their retirement shortfalls cannot be bridged by working longer and that other solutions will be needed,” the researchers wrote.
Although many Americans now believe that they’ll be working past their expected retirement age, with 6% saying they’ll never retire, the reality is that many do not. Nearly half of all workers end up retiring sooner than they planned, often due to unexpected circumstances like illness and job loss.
That’s an alarming statistic considering that most people’s confidence in their retirement savings outstrips their actual savings. Fewer than half of workers have figured out how much they’ll need to save in order to stop working, and 1 in 3 Americans have nothing saved for retirement.