IDEAS home Printed from
   My bibliography  Save this paper

Do Households Have A Good Sense of Their Retirement Preparedness?


  • Alicia H. Munnell
  • Wenliang Hou
  • Geoffrey T. Sanzenbacher


The National Retirement Risk Index (NRRI) measures the percentage of working-age households who are at risk of being financially unprepared for retirement. The calculations show that even if households work to age 65 and annuitize all their financial assets, including the receipts from reverse mortgages on their homes, 52 percent will be at risk of being unable to maintain their standard of living in retirement. This brief examines whether households have a good sense of their own retirement preparedness — do their retirement expectations match the reality they face? Do people at risk know they are at risk? Have perceptions changed before and after the financial crisis? The discussion proceeds as follows. The first section summarizes the NRRI. The second section compares households’ self-assessed preparedness – at an aggregate level – to the objective measure provided by the NRRI in 2004 and 2013. The third section moves from the aggregate to individual households to determine the share of households with and without accurate perceptions. The fourth section identifies the characteristics of the households with inaccurate perceptions – those that are either “too worried” or “not worried enough.” The final section concludes that, on a household-by-household basis, almost 60 percent of self-assessments agree with the NRRI predictions and that the 40 percent of households that get it wrong do so for predictable reasons. The question remains, however, whether unprepared households that recognize their situation are any more likely to take corrective action than those that do not.

Suggested Citation

  • Alicia H. Munnell & Wenliang Hou & Geoffrey T. Sanzenbacher, 2017. "Do Households Have A Good Sense of Their Retirement Preparedness?," Issues in Brief ib2017-4, Center for Retirement Research.
  • Handle: RePEc:crr:issbrf:ib2017-4

    Download full text from publisher

    File URL:
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    1. Lusardi, Annamaria & Mitchell, Olivia S., 2007. "Baby Boomer retirement security: The roles of planning, financial literacy, and housing wealth," Journal of Monetary Economics, Elsevier, vol. 54(1), pages 205-224, January.
    2. Alicia H. Munnell & Mauricio Soto & Anthony Webb & Francesca Golub-Sass & Dan Muldoon, 2008. "Health Care Costs Drive Up the National Retirement Risk Index," Issues in Brief ib2008-8-3, Center for Retirement Research, revised Mar 2008.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Ravit Rubinstein-Levi & Haim Kedar-Levy, 2019. "The Effect of Attitudes Regarding Retirement on Pension Savings," Review of Economics & Finance, Better Advances Press, Canada, vol. 15, pages 1-13, February.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:crr:issbrf:ib2017-4. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Amy Grzybowski) or (Christopher F Baum). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.