Retirement Index Finds 43% Will Come Up Short for Retirement

June 6, 2006 ( - A new retirement index found that 45% of working-age households are "at risk" of not being able to afford the same standard of living in retirement as they do now.

The Center for Retirement Research at Boston College found that younger households are even more at risk because those are the households with low incomes or no pensions. The authors of the report blame a rising Social Security retirement age, a sharp decline in traditional pensions paired with sagging 401(k) balances, low savings rates, and longer life spans.

The study defined those “at risk” as falling more than 10% short of their income target in retirement.

Other findings include:

  • Low income Gen Xers (born between 1965 and 1972): 60% are at risk of having insufficient funds in retirement.
  • Low income late boomers (born between 1955 and 1964): 54% are at risk.
  • Middle income Gen Xers: 46% are at risk.
  • Single Gen X Women: 52% are at risk.
  • Two-earner Gen Xers: 53% are at risk.

The results of the study warn that “unless Americans change their ways, many will struggle in retirement,” Alicia Munnell, director of CRR, said in a statement. She added that there is “no silver bullet, the answer is saving more and working longer.”

The report goes even farther in suggesting some ways in which those “at risk” households can help buffer the impact of retirement by working even two years longer and saving 3% more.

The sample included about 4,500 households from the Federal Reserve’s 2004 Survey of Consumer Finances.