On January 9, 2018, the Center for Retirement Research (CRR) at Boston College released its issue brief, National Retirement Risk Index Shows Modest Improvement in 2016The brief discusses the National Retirement Risk Index (NRRI), which measures the percent of U.S. working households who are at risk of being unable to maintain their pre-retirement standard of living throughout retirement.  The NRRI compares projected household replacement rates (i.e., retirement income as a share of pre-retirement income) with the target replacement rates needed to maintain their standard of living, and then calculates the percentage of households at risk of falling short.  The results indicate that more than half of U.S. households will face major retirement income challenges and need more retirement savings to ensure retirement security.

The report’s key findings include:

  • Between 2013 and 2016, the NRRI improved modestly, decreasing from 52% to 50% of working-age households.
  • The modest improvement was mainly due to increasing home prices and stock market gains.
  • However, declining interest rates and Social Security’s rising “Full Retirement Age” have hindered greater progress.

The brief concludes, “half of today’s households will not have enough retirement income to maintain their pre-retirement standard of living, even if they work to age 65 and annuitize all their financial assets, including the receipts from a reverse mortgage on their homes. This analysis clearly confirms that many of today’s workers need to save more and/or work longer to achieve a secure retirement.”

The brief is available here.