Hoping to serve as a “catalyst for change,” the Center for Retirement Research at Boston College has some bleak news for Americans. Alicia Munnell, director of the Center, says she wanted the new National Retirement Risk Index (NRRI) to “focus a laser” on the fact that many Americans are “ill prepared” for retirement so that they might change their behavior. The overall NRRI stands at an inaugural 43%, that number being the percent of people whose income in retirement is more than 10% below the level needed to maintain their pre-retirement standard of living (which normally stands at 70% of preretirement income). The index is based on data from the Federal Reserve’s Survey of Consumer Finances and includes income from Social Security, DB and DC plans, other savings, and housing. The index is also broken into age ranges and income levels; the full report can be downloaded at www.bc.edu/crr/nrri.shtml.

In a teleconference on June 6 relating the findings of the index, Munnell noted that “early boomers,” those baby boomers closest to retirement (born between 1946 and 1954) are in the best shape relatively speaking, but she cautioned that even that population cohort should expect to work until age 65. Just working two more years before retiring or saving an additional 3% can substantially improve the odds of financial security for retirees, she argued, but still Munnell called for a “national retirement income policy” to address the challenge.

The Risk Index takes a fairly conservative approach to the amount of income that people can expect in retirement–it assumes that homeowners will monetize their homes through reverse mortgages, for instance, and will annuitize their wealth in retirement.