NATIONAL RETIREMENT RISK INDEX HOW MUCH LONGER DO WE NEED TO.pdfVIP

RETIREMENT R E S E A R C H June 2012, Number 12-12 NATIONAL RETIREMENT RISK INDEX: HOW MUCH LONGER DO WE NEED TO WORK? By Alicia H. Munnell, Anthony Webb, Luke Delorme, and Francesca Golub-Sass* Introduction The National Retirement Risk Index (NRRI) measures section presents the results, showing the cumulative the share of American households “at risk” of being percentage of households ready for retirement at dif- unable to maintain their pre-retirement standard of ferent ages, with breakdowns by income and current 2 living in retirement. The NRRI is determined by age. The third section addresses how much longer comparing households’ projected replacement rates – households have to work beyond age 65 to be pre- retirement income as a percentage of pre-retirement pared for retirement. The final section concludes that income – with target rates that would allow them over 85 percent of households would be prepared to to maintain their living standards. A recent update retire by age 70. Thus, many individuals will need to shows that, in the wake of the financial crisis and work longer than their parents did, but they will still the Great Recession, 51 percent of today’s working be able to enjoy a reasonable period of retirement, es- households are at risk.1 But a key assumption of the pecially as health and longevity continue to improve. NRRI is that people retire at age 65. Clearly if people worked longer, the percentage at risk would decline. Adapting the NRRI This brief adapts the NRRI calculations to address the question: At what age would the vast majo