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Finances » Knowledge of Financial Needs at Retirement

Why It's Important

It is important to understand what it will cost to live in retirement at about the same standard of living you experience today. Most Americans fail to understand that it typically cost at least 80 percent of their pre-retirement income to maintain about the same standard of living they experience today in their retirement years.

See Data By: Richmond MSA | Virginia | National

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How Virginia Is Doing

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How the U.S. Is Doing

The National Retirement Risk Index (NRRI) measures the percentage of working-age households that are at risk of being unable to maintain their pre-retirement standard of living in retirement. It addresses one of the most compelling challenges facing the nation today -- ensuring retirement security for an aging population.
Key findings in the National Retirement Risk Index show that:

The retirement landscape is shifting dramatically, making the outlook for retiring Baby Boomers and Generation Xers far less sanguine than for current retirees
Nearly 45 percent of households are "at risk" of not having enough to maintain their living standards in retirement
Explicitly including health care in the Index drives up the share of households â€˜at risk' to 61 percent
Saving more and working longer may substantially improve the outlook

(CENTER FOR RETIREMENT RESEARCH AT BOSTON COLLEGE NRRI, 2009)

In October 2006, Thrivent Financial for Lutherans surveyed 2,500 pre-retirees, ages 45-64, to gauge their retirement readiness and expectations. Although the majority of pre-retirees (67 percent) anticipate that they will either enjoy a lifestyle similar to life now -- or even thrive in retirement -- they admit to wishing they were better prepared. According to the survey, most pre-retirees (35 percent) ranked "starting to save and invest too late in life" as the number one obstacle that keeps them from saving more money for retirement. Other top-ranking obstacles included the cost of health care or health insurance (32 percent), a low-paying job (29 percent) and credit card debt (28 percent).

56 percent of Boomers believe they will have the same or better standard of living than their parents
71 percent of Boomers cite lack of money as a source of prevention to their envisioned retirement 86 percent of Boomers advise younger generations to start saving soon
One in four (24 percent) pre-retirees haven't begun saving for retirement and one in five (19 percent) didn't start until they were at least 45 years old
Fifty-nine percent have neither gone through a formal retirement planning process with a financial professional nor done serious calculations on their own
Forty-one percent of respondents are worried about the effect of health care costs on their retirement savings

(THRIVENT FINANCIAL, 2006)