May 8 - 21, 2013

The National Retirement Risk Index, created by the
Center for Retirement Research at Boston College,
shows that the percentage of workers at risk of having
their standard of living decline in retirement has grown
over time (see chart to the right).

Monique Morrissey, an economist at the Economic
Policy Institute, said that the Index does not have a
one-size-fits all model to determine what percentage
of earned income a retiree needs to maintain a
pre-retirement standard of living, but has “different
replacement rates for homeowners, for renters, [and
for varying] household size.”
Year National Retirement Risk Index
1983 31%
1986 31%
1989 30%
1992 37%
1995 38%
1998 40%
2001 38%
2004 45%
2007 44%
2010 53%
Source: Center for Retirement Research at Boston College


Andrew Biggs, a resident scholar at the American Enterprise Institute, however, criticized the use of “target replacement rates” in studies like those of the Center for Retirement Research: “If ‘real’ target replacement rates are more dispersed than the targets that studies like the Retirement Risk Index use, you’re automatically going to find more people at risk, even if everyone is precisely at their ‘real’ target, simply because peoples’ real saving levels will be more spread out.”

“It doesn’t mean people aren’t unprepared for retirement,” he acknowledged, “but it does show a possible bias that would push measured results upward.”

But that “possible bias,” if it is present, is present in respect to data from all years that the study examined. For the at-risk percentage to move from 31 percent (based on 1983 data) to 53 percent (based on 2010 data), strongly suggests that whatever the “real” level of retirement insecurity was in 1983, it has gotten much worse (that is, has almost doubled) in the intervening 27 years.