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RETIREMENT R E S E A R C H July 2014, Number 14-11 HOW MUCH SHOULD PEOPLE SAVE? By Alicia H. Munnell, Anthony Webb, and Wenliang Hou1 Introduction Nuts and Bolts of the NRRI The National Retirement Risk Index (NRRI) shows Constructing the NRRI involves three steps: 1) pro- that half of today’s working families are “at risk” of jecting a replacement rate – retirement income as a not being able to maintain their standard of living share of pre-retirement income – for each member of once they retire. This result is not surprising given a nationally representative sample of U.S. households; that half of private sector workers do not have an em- 2) constructing a target replacement rate that would ployer–sponsored retirement plan and that many who allow each household to maintain its pre-retirement do have a plan save relatively little. The question is standard of living in retirement; and 3) comparing the how much households would have to save in order to projected and target replacement rates to find the per- maintain their pre-retirement living standards. This centage of households at risk. Although the analysis analysis employs the NRRI infrastructure in a slightly in this brief relies on the model used to generate the different way to answer this question in three steps. targets, it is useful to recap how the target model fits What is the average amount of saving that will come into the NRRI structure (see Figure 1). from retirement savings plans? What is the average required saving rate to produce adequate retirement