A new study reveals a substantial jump in the percentage of Americans who won’t be able to maintain their standard of living in retirement in the wake of the economic crash.

The Center for Retirement Research at Boston College (CRR) says 51 percent of Americans are at risk of lower living standards in retirement, up from 44 percent in 2007, before the crash. The higher risk stems from familiar factors, including lower retirement account values, falling housing prices, high mortgage debt and a higher Social Security full retirement age, which gradually is moving to 67.

CRR’s finding is contained in an updated calculation of its National Retirement Risk Index (NRRI), which defines “risk” as the likelihood that individuals will not be able to maintain their standard of living in retirement.

Source: Center for Retirement Research at Boston College

CRR’s analysis, which includes a break-out of risk by income category, shows that the largest jump between 2007 and 2009 occured in middle- and high-income households, which started out with larger asset bases. However, low income households are at the greatest overall level of risk.

CRR’s gloomy conclusion: ”. . . half of today’s households will not have enough retirement income to maintain their pre-retirement standard of living, even if they work to age 65, which is above the current average retirement age. Even if the stock market should bounce back, the housing bubble is unlikely to reappear. And as defined benefit plans fade in an environment where total pension coverage remains stagnant, Social Security’s Full Retirement Age moves to 67, and life expectancy increases, the outlook will get worse over time. The NRRI clearly indicates that this nation needs more retirement saving.”

Click here to download the full report on the National Retirement Risk Index [pdf file].

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Tags | housing, retirement, saving