Author: Nationwide Retirement Solutions
Almost half of all U.S. households (43 percent) are at risk of not being able to maintain their current standard of living through retirement.
That’s the stark reality revealed by Retirements at Risk: A New National Retirement Risk Index, a report from a Nationwide-sponsored study conducted by the prestigious Center for Retirement Research (CRR) at Boston College.
Almost half of all U.S. households at risk, yet even relatively modest adjustments can substantially improve retirement security.
The CRR used data from its study to create the National Retirement Risk Index. The Index defines “at risk” to mean those households projected to fall at least 10 percent short of their income target in retirement.
As the nearby table shows, younger households are the most vulnerable as they’re likely to see reductions in Social Security coverage and have no employersponsored pension (defined benefit) programs as retirement income resources.
Public workers may be at greater risk
The challenge may be even more daunting for public workers. In its 2005 report America’s Retirement Voice, Trends in Public Sector Retirement Plans, released earlier this year, The Nationwide Retirement Education Institute SM noted that:
- About 34% of public workers nationwide participate in supplemental plans, not even half of the 70% in the private sector.
- The average retirement-account balance among public employees is just under $30,000, compared to about $70,000 in the private sector.
Two CRR documents offer a quick-read understanding of the Index:
- The National Retirement Risk Index in a Nutshell
- Myths and Realities about Retirement Preparedness
Both are available at www.bc.edu/centers/crr/ nrri.shtml. |
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Index is a wakeup call
Nationwide and the CRR are hoping that the Index will become the leading indicator of retirement readiness in the United States and serve as a wakeup call for our nation’s legislators, policymakers, employers and employees.
According to Alicia H. Munnell, Director of the CRR, the Index results suggest that “unless Americans change their ways, many will struggle in retirement. Yet, even relatively modest adjustments — working two extra years or saving 3 percent more — can substantially improve retirement security.”
New tool coming from Nationwide
This Fall, using the same data and analysis, Nationwide will introduce a user-friendly, online tool so employees can easily score their personal retirement readiness. Similar to a credit or cholesterol score, the tool will give users a single number that will help them understand how financially equipped they are for retirement and help them formulate a strategy to improve their retirement readiness.
Watch for an announcement about Nationwide’s new tool coming later this year.
Sources:
Retirements at Risk: A New National Retirement Risk Index, page i, June 2006, Alicia H. Munnell, Anthony Webb and Luke F. Delorme, The Center for Retirement Research at Boston College.
Many Households Are at Risk In Their Retirement Finances, The Wall Street Journal, June 6, 2006, page D3.
Study: 43% won’t have enough in retirement, CNN.com (http://money.cnn.com/2006/06/06/retirement/risk_index/?cnn=yes), June 6, 2006.
Risk index’ helps figure retirement need, Atlanta Journal-Constitution (http://www.ajc.com/business/content/money/stories/0606bizretire.html), June 6, 2006.
