Two Respected Studies Clash on How Many Households Face Retirement Shortfalls

Full analysis

Two well-known studies reach strikingly different conclusions about retirement readiness. The National Retirement Risk Index from the Center for Retirement Research at Boston College has averaged about 46% of working households considered at risk of falling short since 2004, with the most recent update putting that figure at 39%. A 2006 Journal of Political Economy study, which built a more detailed model accounting for future income taxes, Social Security, pensions, healthcare costs, and changing family spending over time, found that fewer than 20% of households were actually behind their savings targets — and for most of those, the gap was relatively small. The key difference is what each study assumes about retirement spending: the Boston College index measures whether households can replace today's income, which can overstate the problem when current spending is inflated by child-rearing costs that will eventually disappear.