Households ‘At Risk’: A Closer Look at the Bottom Third

Alicia H. MunnellAnthony WebbFrancesca N. Golub-Sass Pamela Perun

IB#7-2

Introduction

The Center’s National Retirement Risk Index (NRRI) provides a measure of the percentage of households that will be unable to maintain their standard of living in retirement. Issued in June 2006 with numbers based on the 2004 Federal Reserve’s Survey of Consumer Finances, the Index shows that 43 percent of the population will be ‘at risk.’ ‘At risk’ means different things, however, for households in different parts of the income distribution. For those in the top third, ‘at risk’ may require cutting back on some of the normal amenities enjoyed before retirement, but for those in the bottom third ‘at risk’ may mean foregoing essentials. This brief takes a closer look at the NRRI for the bottom third of the population…