The National Retirement Risk Index: After The Crash
IB#9-22
Introduction
The National Retirement Risk Index measures the share of American households who are ‘at risk’ of being unable to maintain their pre-retirement standard of living in retirement. The Index results from comparing households’ projected replacement rates – retirement income as a percent of pre-retirement income – with target rates that would allow them to maintain their living standard. The results showed that even if households work to age 65 and annuitize all their financial assets, including the receipts from reverse mortgages on their homes, in 2004 43 percent would have been ‘at risk’ of being unable to maintain their standard of living in retirement.
The NRRI was originally constructed using the Federal Reserve’s 2004 Survey of Consumer Finances (SCF). The SCF is a triennial survey of a nationally representative sample of U.S. households, which collects detailed information on households’ assets, liabilities, and demographic characteristics. The release of the Federal Reserve’s 2007 Survey of Consumer Finances seemed like a great opportunity to re-assess Americans’ retirement preparedness...
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Alicia H. Munnell is the Director of the Center for Retirement Research at Boston College (CRR) and the Peter F. Drucker Professor of Management Sciences at Boston College’s Carroll School of Management. Anthony Webb is a research economist at the CRR. Francesca Golub-Sass is a research associate at the CRR. The Center gratefully acknowledges Nationwide Mutual Insurance Company for its exclusive financial support of the National Retirement Risk Index (NRRI). The authors would like to thank Jeffrey Brown, Gary Burtless, and Robert Clark for very insightful comments. Any remaining omissions are solely those of the authors. This brief provides updated NRRI results; prior Index-related publications are available here.