COLUMBUS, OH - New findings released by the Center for Retirement Research at Boston College say the sharp rise in the National Retirement Risk Index can be blamed on the cost of healthcare.
According to the NRRI, 61 percent of American workers are at risk because they're not financially prepared for retirement. This is a 17-point jump from the previous index, which was released in July at 44 percent. Research analysts believe this jump demonstrates how the surging cost of healthcare has a significant effect on retirement savings.
"What that means is that 61 percent of households are not on track to maintain their pre-retirement, non-health care level of consumption in retirement," said CRR Director Alicia H. Munnell. "The Index also shows that risk will rise for younger workers and low-income households. The number could be considerably higher once long-term care costs are taken into account, and if households do not plan rationally."
"Our research continues to demonstrate that the retirement crisis is very real, and workers must plan now for their retirement years if they want to maintain their current standard of living," she added.
"Medical expenses have increased 43 percent in the last five years and will likely increase at a higher rate compared to overall consumer spending. And, health care now accounts for more than 20 percent of all personal spending; double what it was in 1970," said Paul Ballew, senior vice president of customer insights and analytics for Nationwide.
"The personal savings rate in the U.S. today is essentially zero. The Employee Benefits Research Institute shows that 44 percent of those respondents said they were 'guessing' as to how much money they'll need to save to live comfortably in retirement." he said.
Ballew said consumers can start saving for retirement today by:
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starting a healthier lifestyle;
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taking responsibility for financial health by planning for retirement;
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using the resources available, such as online planning aids and investment professionals; and
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talking with family about retirement.
"The National Retirement Risk Index indicates the retirement situation will get more serious over time. It's important for all people, including young Americans just entering the workforce, to have a solid retirement income plan. Making small changes will add up over time. Gradually reducing debt while increasing 401(k) savings can help workers get on the right path to a financially secure retirement," Ballew said. "The key is to start today."