2020 Updates to the National Retirement Risk Index

Jan 26, 2021 / Amanda Chase, Horsesmouth Assistant Editor

The National Retirement Risk Index (NRRI) measures the share of American households that are at risk of being unable to maintain their pre-retirement standard of living in retirement. The NRRI compares households’ projected replacement rates—retirement income as a percentage of pre-retirement income—with target rates that would allow them to maintain their living standard and then calculates the percentage falling short. Since the Great Recession, the NRRI has shown that even if households work to age 65 and annuitize all their financial assets, including the receipts from reverse mortgages on their homes, roughly half of households are at risk. The last survey was done in 2019, but of course the world has changed dramatically since then. Here is a 2020 update.

Our expectation pre-COVID was that the NRRI would decline in 2019—that is, fewer households would be at risk. After all, the stock market and house prices were up. On the other hand, interest rates have continued to decline, which means that people will get less income from their accumulated wealth. And the rise in wage growth for lower-income groups, which is good news generally, is accompanied by lower projected Social Security replacement rates. The net effect is that the NRRI did decline, but only slightly—from 50 percent in 2016 to 49 percent in 2019.

COVID-19 and the ensuing recession have inevitably made the situation worse. To date, the problems have not involved the stock market—except for a sharp, but brief, decline in last February and March—or the housing market. Rather, the pandemic has led to substantial job loss. Thus, the main question is how to incorporate unemployment into the NRRI. At the same time, this negative impact was partially offset by other factors. On balance, the NRRI rose modestly to 51 percent in 2020. While this effect is small, it does not capture the increasing savings gap among households already at risk

Find the full Center for Retirement Research issue brief here.


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