By: Eric Gursky
Oct. 27 (Bloomberg) -- Fewer U.S. households are prepared for retirement after the value of their homes and investment portfolios declined in the recession, Nationwide Mutual Insurance Co. said.
Fifty-one percent of Americans would be unable to maintain their standard of living if they retired at age 65, compared with 44 percent in 2007, the insurer said today in a statement, citing the National Retirement Risk Index it developed with the Center for Retirement Research at Boston College. The estimate is “conservative” because it doesn’t include medical costs or long-term care, the insurer said.
“The real problem behind this is that so many households were dependant on their home values,” Paul Ballew, a senior vice president of customer insights and analytics at Nationwide, said in an interview. “Once home prices came back down to normal levels, we wake up one day and realize we don’t have adequate savings.”
Americans are facing a decline in the value of their homes and other assets at the same time the U.S. government is pushing back the age that retirees qualify for full Social Security benefits. The average 401(k) retirement savings account fell by almost one-third in 2008, and people aren’t saving enough to make up the difference, Ballew said.