The Center for Retirement Research at Boston College has created the National Retirement Risk Index.
The National Retirement Risk Index (NRRI) measures the percentage of working-age households that are at risk of being unable to maintain their pre-retirement standard of living in retirement. It addresses one of the most compelling challenges facing the nation today — ensuring retirement security for an aging population.
The index assumes that households annuitize all of their assets. Those that fail to come within 10 percent of the targeted retirement income are said to be at risk. It assumes retirement at age 65. The index incorporates a wage indexed smoothing approach for estimating retirement consumption. This seems to generate a replacement rate in retirement of between 70 to 71 percent. Currently, about 45 percent are at risk of not reaching a sustainable retirement.
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