noneconomic factors—health, job satisfaction, financial planning, and
adaptability—are used to predict financial readiness in a new retirement
readiness index that fundamentally differs from traditional predictors.
Vadiveloo, professor of mathematics and director of the Goldenson Center for
Actuarial Research at the University of Connecticut, set out to measure several
factors that affect one’s preparedness for retirement, in an attempt to provide
“a more holistic measure.” The standard way of measuring individuals’ ability
to retire compares their current net assets with the projected value of those
assets at some point in the future. The problem, according to Vadiveloo, is
that those projections are hugely dependent on the performance of financial
retirement indices are directly correlated with the current state of the
economy and tend to portray a negative image of retirement readiness during
adverse economic times, which could be misleading,” he says.
The new National
Retirement Sustainability Index (NRSI) adds four factors to the basic model of
readiness—health at retirement, job satisfaction, level of financial planning
and level of adaptability. These give a more complete picture of what a
person’s retirement is apt to look like, Vadiveloo says in the report, and they broaden the list of options people may use to improve their retirement outlook,
even during an economic downturn.