More than Half of American Households on Track for Retirement Savings

About 57% of U.S. households should be able to live comfortably in retirement if they work until age 65 and buy annuities with their retirement nest egg, a new study suggests.

The study, released Tuesday by the Center for Retirement Research at Boston College, found that those Americans should not be financially “at risk” after they stop working by being within 10% of a savings rate that is enough to keep up their pre-retirement living standard.

That’s the yardstick used in the group’s National Retirement Risk Index (NRRI), which it launched last year, according to a news release. The research found that 43% will miss their retirement savings target by that measurement. The amount of money people need while retired compared to pre-retirement varies, but is estimated to be from 65% to 85%, depending on household income and marital status, according to the news release.

According to the researchers Alicia H. Munnell, Anthony Webb, and Francesca Golub-Sass who authored the study, “Is There Really A Retirement Savings Crisis? An NRRI Analysis,” many more Americans could be at risk if the calculations assume people stop working earlier, are reluctant to annuitize their 401(k) balances or use the equity in their home and are hit by health-care related costs.

Effects of Age

The analysis found that the “at risk” group gets bigger when the focus changes from older to younger workers. Some 35% of those born between 1946 and 1964 are in the “at risk” category, while that figure rises to 44% for those born between 1955 and 1964 and 49% for those born between 1965 and 1972, according to the study.

The reasons for the trend, according to the researchers: increasing longevity (people are in retirement longer with an average retirement at age 63) and a “contracting’ retirement income system with decreasing Social Security benefits and the defined benefit-to-defined contribution migration in workplace retirement savings programs.

“In theory 401(k) plans could provide adequate retirement income, but to date the median balance for household heads approaching retirement is only $60, 000,’ the researchers wrote. “And, most of the work­ing-age population saves virtually nothing outside of their employer-sponsored pension plan.’

Keith Millner, senior vice president of Nationwide Financial’s In-Retirement business, which underwrote the study, said American workers can ensure their golden years if they take action now to maximize their savings and investments.

“Adequate retirement income is not simply a concern for Boomers,’ said Millner, in the news release. “The National Retirement Risk Index indicates the retirement situation will get more serious over time. It’s important for all people, including young Americans just entering the workforce, to have a solid retirement income plan.’

The full study is available at