Americans Still At Risk In Retirement


Most reports tout the economic prosperity of the past five years. The stock market has rebounded from the 2007/2008 collapse, the unemployment rate has fallen to historical lows, and even housing prices have recently started to come back after years in decline.

But the biggest economic problem still lingers—these supposed turn-arounds and recoveries aren’t being reflected in the bank accounts or paychecks of the average American. The latest piece of evidence came in a recent study from the Center for Retirement Research at Boston College, who found that the retirement preparedness of Americans is at high risk. More specifically, the figures haven’t really improved since the last study in 2010.

The National Retirement Risk Index (NRRI) compares the projected rate of income replacement to the ‘target’ rate in order to calculate the percentage of American households at risk of falling short in retirement. The most recent figures show 52 percent of American households are currently at risk of not having sufficient income to maintain their pre-retirement standard of living.

The report is based off data compiled every three years—so while the most recent report was just released by the Center for Retirement Research, the findings are based off 2013 data.

The figure has been steadily rising since the first calculation of the NRRI in 1983. That first study found that 31 percent of households were at risk. The highest risk rate came in 2010, when 53 percent of households were found to be at risk. Yet despite the supposed prosperity of the past few years, this measure shows very little improvement from 2010—the aftermath of the financial crisis.

According to the Center for Retirement Research, some of the main factors that contributed to the high number of unprepared households were:

  •  Increase in the Full Retirement Age: In 1983, more than half of working households could claim full Social Security benefits at age 65. Now, almost all households are waiting until age 67 to receive those benefits. This has a particular effect on low-income households whose inhabitants are highly dependent on Social Security for a majority of their income.
  • Reverse Mortgage Reform: Last year, the government lowered the percentage of house value that borrowers could receive in the form of a reverse mortgage.
  • Lower Interest Rates: Obviously, lower interest rates have an impact on account balances on 401K/IRAs.

But perhaps the most frightening indicator was the statistic showing that 45 percent of households ages 50-59 are ‘at risk’—suggesting that the next several NRRI reports will feature similarly gloomy numbers.

The atmosphere for retirement in this country is ever-changing. This recent data shows that many Americans need to change likewise in order to protect their golden years.


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