I ran across a truly scary survey the other day about retirement readiness – or rather a lack thereof.
McKinsey & Co. has a “retirement readiness index” that measures changes in the values of retirement assets – Social Security, pension plans and other financial holdings – to determine the financial preparedness of households for retirement. An index value of 100 means a household can maintain its current standard of living in retirement. A reading below 80 calls for large reductions in spending on basic needs such as food, housing and health care.
Now for the scary part: The index reading for a typical household is 63. Sixty-three!
I was slightly relieved to learn the study was conducted back in January. I sure hope the average reading has improved a bit since then, although as of Nov. 24 there is no update available.
Despite all that happened in the second half of 2008, the vast majority of U.S. consumers as of January had not made any changes to their investment portfolios and were not planning to postpone retirement.