US – Less households “at risk” of being unable to maintain their standard of living in retirement

The release of the Federal Reserve’s 2013 Survey of Consumer Finances (SCF) is a great opportunity to reassess Americans’ retirement preparedness as mea- sured by the National Retirement Risk Index (NRRI). The NRRI shows the share of working-age households who are “at risk” of being unable to maintain their pre-retirement standard of living in retirement. The Index is constructed using the SCF, a triennial survey of a nationally representative sample of U.S. households that collects detailed information on their assets, liabilities, and demographic characteristics.

Our expectation was that the NRRI would improve sharply in 2013; it certainly felt like a better year than 2010. The stock market was up, and housing values were beginning to recover. But the ratio of wealth to income had not bounced back from the financial crisis (as noted earlier), more households faced a higher Social Security Full Retirement Age, and the government had tightened up on the percentage of housing equity that borrowers could extract through a reverse mortgage. On balance, then, the Index level for 2013 was 52 percent, only slightly better than the 53 percent reported for 2010 (see Figure 2). This small change was the net result of several factors, some that reduced the NRRI and some that increased it.

Chosen excerpts by Job Market Monitor. Read the whole story at NRRI Update Shows Half Still Falling Short | Center for Retirement Research.