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National Retirement Risk Index is the Doomsday Clock of Baby Boomer retirements.
The National Retirement Risk Index is to retirements what the Doomsday Clock is to nuclear annihilation.
Whereas the Bulletin of Atomic Scientists uses the Doomsday Clock to measure how close the world is to catastrophic nuclear war destruction, the Center for Retirement Research at Boston College uses the National Retirement Risk Index to measure how badly Baby Boomers and others are doing with their pending retirements.
The good news, as far as nuclear destruction is concerned at least, is that the Doomsday Clock hasn't moved from five minutes to midnight since 2007.
The bad news is that the retirement risk index is getting worse; it's climbed from 44 to 51 percent, according to a report this week from CRR.
The research center cites three factors:
- Bursting of the housing bubble;
- Stock market crash;
- Ongoing rise in Social Security's Full Retirement Age.
The index "shows that in 2009 half of today’s households will not have enough retirement income to maintain their pre-retirement standard of living, even if they work to age 65, which is above the current average retirement age," the CRR report concludes.
"Even if the stock market should bounce back, the housing bubble is unlikely to reappear. And as defined benefit plans fade in an environment where total pension coverage remains stagnant, Social Security’s Full Retirement Age moves to 67, and life expectancy increases, the outlook will get worse over time. The NRRI clearly indicates that this nation needs more retirement saving."
The older you are, the worse the index is.
The current index shows that 51 percent of America's retirements are currently at risk. That's an increase from 44 percent in 2007 and 43 percent in 2004.
Broken down by age groups the risks look like this:
- Early boomers = 41 percent;
- Late boomers = 48 percent;
- Gen Xers = 56 percent.
The majority of today’s retirees (our parents) are able to afford a decent retirement, according to CRR.
But, it said, "this group is living in a 'golden age' that will fade as Baby Boomers and Generation Xers reach traditional retirement ages in the coming decades. This gloomy forecast is due to the changing retirement income landscape. Baby Boomers and Generation Xers will be retiring in a substantially different environment than their parents did."
Related stories:
Baby Boomer investments on rebound
Baby Boomer retirements held in check
