That was a key conclusion of the latest analysis of the National Retirement Risk Index (NRRI) by the Center for Retirement Research (CRR) at Boston College, in which researchers compared respondents’ self-assessment with their ability to keep their retirement living standard as measured by the NRRI.
The latest NRRI, updated in February by the CRR, shows that 61% of today’s workers will be at risk for not being financially prepared to retire. The 17-point increase from the previous Index number of 44%—released in July 2007—”demonstrates how the surging cost of health care is having a significant effect on retirement savings,” CRR said in a news release.
According to the announcement, 24% of households “worry too much”—they report being inadequately prepared for retirement while the NRRI says they are not at risk. At the other end of the scale, 19% don’t worry enough; they report having enough resources for retirement while the NRRI says they are bound to have financial difficulties in retirement, the news release said.
The CRR news release said factoring in health care costs increases the number of households not concerned enough, indicating that these escalating costs will be a major driver for not having enough saved. The CRR has estimated that a typical couple retiring in 2010 would need about $200,000 in savings to cover their out-of-pocket health care costs over their remaining lifetime (see Fidelity Says Retirees Need $215,000 to Cover Health Care Costs).
Low Earners Worry More
Additional findings include:
- Lower income households are more likely to fall into the “too worried” group.
- Married one-earner households are significantly more likely to be “too worried” and significantly less likely to be “not worried enough.”
- Those in poor health are more likely than those in good health to fall into the “not worried enough’ group, perhaps because those in poor health are less likely to have the energy to focus on financial issues and are more likely to be adversely surprised by their preparedness for retirement.
- The younger the household, the more likely it is to be “not worried enough.”
The report is available here.