Are Retirees Falling Short? Reconciling the Conflicting Evidence

Source: Alicia H. Munnell, Matthew S. Rutledge and Anthony Webb, Center for Retirement Research at Boston College, IB#15-5, March 2015

The brief‘s key findings are:
Federal Reserve data show that retirement preparedness has been declining over time, but studies on the level of preparedness offer conflicting assessments.
The National Retirement Risk Index (NRRI) finds half of households are “at risk,” while studies of optimal savings suggest less than one-tenth will fall short.
The optimal savings results depend crucially on two assumptions:
households spend less when their kids leave home (the NRRI assumes no decline); and
households plan for declining consumption in retirement (the NRRI assumes steady consumption).
While the issue remains unsettled, the Federal Reserve data are consistent with the NRRI finding that retirement shortfalls are a growing problem.