With the "graying" of America well underway, a lot of
attention is being given to making sure retirees will have enough money to last
the rest of their lives.
Recent analysis by the nonpartisan Employee Benefit Research
Institute (EBRI) finds that the average retirement savings shortfall is about
$48,000 per individual. But, adding nursing home and home health care costs
would -- in some cases -- almost double that amount.
The research uses the Institute's Retirement Security Projection Model to estimate the total national aggregate and individual retirement deficits at age 65 for three categories of workers:
- Early Boomers (born between 1948-1954, now ages 56-62).
- Late Boomers (born between 1955-1964, now ages 46-55).
- Generation Xers (born between 1965-1974, now ages 36-45).
More money needed
EBRI's analysis finds the aggregate national retirement savings
shortfall is $4.6 trillion, for an overall average of $47,732 per individual.
The average shortfall varies by age, gender, and marital status.
The Institute says adding nursing home and home health care
expense increases the average individual retirement savings shortfall for
married households by $25,317. Single males experience an average increase of
$32,433, while single females have an increase of $46,425.
"This helps quantify just how large of an impact nursing
home and home health care expenses can have on people in retirement," said Jack
VanDerhei, EBRI research director and author of the report.
EBRI's estimates are present values (stated in 2010 dollars)
at age 65, and represent the additional individual average amount needed at age
65 to eliminate expected deficits in retirement. EBRI notes this aggregate
deficit assumed that people will receive current-law Social Security benefits.
Role of Social Security
Reflecting the importance of Social Security, the EBRI
analysis finds that if Social Security retirement benefits were eliminated, the
aggregate retirement income deficit would almost double -- to $8.5 trillion --
or an individual average of approximately $89,000.
EBRI's Retirement Security Projection Model has been
developed since the late 1990s to estimate how much money individuals will need
for "basic" expenses (food, shelter, etc.) and uninsured health care costs in
retirement, and what financial resources they are likely to have at retirement
age.
Younger consumers at risk
Earlier this year, EBRI released its 2010 Retirement
Readiness Rating, which showed the degree to which Baby Boomers and GenXers are
likely to be "at risk" of running short of money in retirement.
For instance, EBRI has found that 70 percent of households
in the lowest one-third when ranked by pre-retirement income were classified as
"at risk." EBRI's analysis also presents the percentage of compensation
different groups would need in terms of additional savings to have a 50, 70, or
90 percent probability of retirement income adequacy.
