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According to the National Retirement Risk Index (NRRI), over half of today’s working families are not saving enough to maintain their pre-retirement standard of living. The NRRI measures how prepared households are for retirement by comparing projected replacement rates (or how much an individual’s retirement income replaces his or her pre-retirement income) and a target replacement rate (or a target that would allow a retiree to maintain the same standard of living as before retirement). The NRRI is the percentage of households that fall more than 10 percent short of their target.

The NRRI indicates that 52 percent of households won’t be able to maintain the same standard of living in retirement. Low interest rates and the gradual rise of Social Security’s Full Retirement Age from age 65 to age 67 are two main reasons why so many households continue to fall short. But compared to the previous year, the 2013 NNRI showed that fewer households age 40 to 49 were at risk. Risk also differed greatly between households with defined benefit plans (primarily public sector workers) and 401k plans (primarily private sector workers). Defined benefit plans in the public sector tend to make up a much larger portion of retiree income, and only 20 percent of households covered by defined benefit plans were at risk versus 53 percent of households covered by defined contribution only plans were at risk.

Overall, households will need to improve their savings habits and/or be prepared to work longer.