It’s no secret that the state of retirement is in a crisis, and it’s getting worse. For those who are on the verge of retiring, they will realize that these times won’t exactly be how they imagined them to be when they were in the midst of their careers 30 years ago.
According the Center for Retirement Research at Boston College, more than half (52 percent) of the nation’s pre-retirement households are at high risk of being unable to maintain today’s living standards when they finally reach retirement. This is little changed during the last three years, but definitely a lot higher than the reported 1983 figure of 31 percent.
Here is what Alicia Munnell, the center’s director, wrote on the Wall Street Journal’s MarketWatch:
“Our expectation was that the NRRI would improve sharply in 2013; it certainly felt like a better year than 2010. The stock market was up, and housing values were beginning to recover. But the ratio of wealth to income had not bounced back from the financial crisis, more households would face a higher Social Security Full Retirement Age, and the government had tightened up on the percentage of housing equity that borrowers could extract through a reverse mortgage.”
So what exactly do pre-retirees have to do in order to prevent their living standards from diminishing when they reach retirement? Essentially, work more or longer and set aside more money for retirement.
With the labor force participation rate at a 36-year low, consuming ramping up again and the national savings rate under five percent, it’s not really surprising that most Americans won’t maintain their standard of living upon retirement.
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