Retirement security has declined in the wake of the global financial crisis and ensuing recession. Despite an extended period of recovery, half of households ages 30-59 are at risk of inadequate retirement income compared to 44 percent in 2007. The questions addressed in this brief are how the percentage at risk varies by race/ethnicity in 2016 and how the impact of the crisis and the recovery led to the 2016 pattern.
This brief uses the National Retirement Risk Index (NRRI) to assess the retirement security of today’s working-age households. The NRRI is calculated by comparing households’ projected replacement rates – retirement income as a percentage of pre-retirement income – with target replacement rates that would allow them to maintain their standard of living. These calculations are based on the Federal Reserve’s Survey of Consumer Finances, a triennial survey of a nationally representative sample of U.S. households. As of 2016, the NRRI showed that, even if households worked to age 65 and annuitized all their financial assets (including the receipts from reverse mortgages on their homes), half of households were at risk of falling short in retirement.
– Center for Retirement Research at Boston College
