Are Retirees Falling Short? Reconciling the Conflicting Evidence

The brief‘s key findings are:

• Federal Reserve data show that retirement preparedness has been declining over time, but studies on the level of preparedness offer conflicting assessments.

• The National Retirement Risk Index (NRRI) finds half of households are “at risk,” while studies of optimal savings suggest less than one-tenth will fall short.

• The optimal savings results depend crucially on two assumptions:
  • households spend less when their kids leave home (the NRRI assumes no decline); and
  • households plan for declining consumption in retirement (the NRRI assumes steady consumption).

• While the issue remains unsettled, the Federal Reserve data are consistent with the NRRI finding that retirement shortfalls are a growing problem.