Retirement & Financial Planning Report

Increases in housing prices and gains in stocks since the worst of the recent economic downturn have improved financial security for retirement by only a little, according to the Center for Retirement Research.

The organization’s “retirement risk index” measures the percentage of working-age households at risk of being unable to maintain their current standard of living into retirement. As of 2010, for example, the index showed that even if households worked to age 65 and turned their assets into annuities, 53 percent were at risk, meaning their projected income replacement rates were more than 10 percent below the target for various types of households.

Since then, a recent study noted, both housing values and the prices of equities have increased. However, it said that the gains in stocks have been concentrated among the top third of income earners, who own nine-tenths of personal stock investments.

The concentration is less pronounced in housing, but the gains in value there have been well below the increase in the overall value of stocks. The result is that the percentage of households at risk decreased only from 53 to 50 percent overall – from 44 to 40 percent among the top third of earners, from 54 to 52 percent among the middle third and only from 61 to 60 percent among the lowest third.

It added that even with the overall improvement, the percentages at risk remain higher than in 2007 due in part to the increase in the age at which full Social Security benefits can begin, and the overall lower interest rates on the types of conservative investments most favored by retirees.