How's that for a spooky headline?!

Turns out financial guru Suze Orman just dished out her latest advice on retirement. Her big takeaway is that everyone should keep working until they're at least 70 years old.

Although my initial instinct was to scoff at this article, I had to remind myself that my financial mindset is drastically different than most people.

For someone chasing financial freedom like I am, the prospect of working at my corporate job until I'm 70 is a truly terrifying proposition. It's that fear that's motivated me to save aggressively for a more secure future.

As a result, my financial situation is quite a bit less precarious than most people contemplating retirement in their late 50s and early 60s. The households I believe that Suze's article is targeting.

Are Households Prepared for Retirement?

According to the Economic Policy Institute, the average US household has $95,776 saved for retirement (in 2013 dollars). With the median coming in at a paltry $5,000!

The numbers are better for those households closest to retirement, but it's all relative of course.

The highest age group shown below has an average household retirement account savings of $163,577.

mean retirement of households

If I use my average household expense estimate of $48,000 from a prior analysis, it means that the households closest to retirement could last maybe 3.5 years if they relied solely on their savings and weren't invested.

And those are the best-prepared households!

Now you could argue that most people will invest their savings and not draw down to zero. If we assume a generous 7% return, the average retirement savings will generate about $11,500 per year in income. Well short of what would be needed to cover expenses.

If we add Social Security to the equation, those households would have another $1,360 per month or $16,320 per year in additional income, per worker.

Even if we assume a dual-income household, that only brings the total to $44,140 per year gross. That's still short of covering the average expenses, but close enough to get by with some sacrifices.

Of course all of the above is based on the average. If you consider the median, the picture gets downright frightening!

The highest age group shown below has a median household retirement account savings of $17,000.

median retirement of households

This means that half of those households don't have any real retirement savings to speak of, and will need to depend solely on Social Security.

In a single-income household, that will barely cover medical expenses. In a dual-income house, you're effectively living at below poverty level.

Maybe Suze isn't Crazy

With this context in mind, it's easy to understand why Suze sounds the alarm on the traditional retirement age of 65. In fact, you might argue that pushing retirement to the age of 70 may not be enough for most people.

Hopefully, many soon-to-be retirees are at their maximum earning potential and have the ability to play catch up with savings. In theory, mortgages are either paid off, or reasonably close, kids are out of school or relatively close, and the option to downsize is more realistic. All those factors should help them increase their savings rate dramatically.

If they're not exercising a high savings rate, they're effectively putting all their retirement eggs in the social security basket.

Of course, counting on playing catch up between the age of 65 and beyond is a risky strategy. The corporate world tends to be ruthless with aging employees, who they can replace with new talent for much cheaper.

Health is, of course, another critical aspect of extending one's career. Many times, working longer is taken off the table as an option due to health-related issues.

Unfortunately, options in your late 50s and 60s to ensure a comfortable retirement are relatively limited.

If we take the average savings amount of $163,577 of the higher age group and divide it up by a 35-year working period, the average yearly savings rate comes out to just over $4,600.

Suze is recommending extending the working-age because the savings rate needs to be drastically improved. If you want the option to retire before 70, you'll need to increase your yearly savings rate quite a bit higher than the average.

You'll also need to invest those savings as early as possible to grow more aggressively.

Can you Retire Before 70?

The article took a quick vote of how confident readers were of their ability to retire before 70, with a slight majority leaning towards high confidence.

Given the general statistics shared earlier, I suspect this is another indication of how most people overestimate their true financial health retiring.

I happen to be the little blue dot to the left on the graphic below. With over 10X the average retirement savings, and 30 more years of runway ahead of me, the odds should be in my favor.

dont retire before 70

Have a look at the charts I shared earlier and see what your X-factor is relative to the average. You can compare to the total population or your particular age group.

Chances are, if your X-factor is low or close to the average, you'll need to follow some of the advice provided by Suze in her article.

If you'd rather have options as you get closer to retirement (traditional or otherwise), you'll need to pay close attention to your finances.

Final Thoughts

Writing this article is a stark reminder of how vulnerable most people's finances are retiring. It's not surprising that mainstream financial advice is beginning to encourage people to work longer. That's, unfortunately, the only choice for many households.

Thankfully, many households have the benefit of the internet, and a slew of personal finance blogs to help steer them in the right direction.