More depressing news from the Center for Retirement Research at Boston College. Almost 45 percent of working-age households are at risk of being unable to maintain their preretirement standard of living in retirement,
according to the Center's National Retirement Risk Index. Younger households and those with low incomes or no pensions are particularly vulnerable.
The center says the reason for this gloomy picture is a rapidly changing retirement landscape defined by a rising Social Security retirement age, a sharp decline in traditional pensions coupled with modest 401(k) balances, low savings rates, and longer lifespans.
The index projects the amount of income households are expected to have in retirement relative to their pre-retirement income. It then compares this replacement rate to a target rate that would allow a household to
maintain its pre-retirement standard of living. Households that fall more than 10 percent short of the target are considered at risk.
While there is no silver bullet, Alicia H. Munnell, director of the CRR, says "the answer is saving more and working longer. Even relatively modest adjustments -- working two extra years or saving 3 percent more -- can substantially improve retirement security."