UConn researches retirement readiness

UConn researchers found that education and health are indicators for retirement readiness that are just as important as economic standing. Photo courtesy of Wikimedia Commons
UConn researchers found that education and health are indicators for retirement readiness that are just as important as economic standing. Photo courtesy of Wikimedia Commons

By Emma Krueger, Staff Writer

A University of Connecticut research team has created a new way to measure the readiness of retirement with a more holistic approach.

The National Retirement Sustainability Index (NRIS), developed in UConn’s Goldenson Center for Actuarial Research, is the first national index that factors in economic and non-economic components to determine retirement readiness.

Other retirement readiness indexes only measure the financial assets one is projected to have at their time of retirement, Jeyaraj Vadiveloo, Goldenson Center Director, said.

Two of the most important non-economic factors accounted for are health and education, Vadiveloo said.

Having good health at your time of retirement is an important factor that lowers health care costs and saves you money, while having an education allows you to be more adaptable and gives you potential to earn income after retirement, Vadiveloo said.

The challenge came to Vadiveloo to create a more holistic approach to a retirement index two years ago during an advisory board meeting for the Goldenson Center.

“They knew we could do cutting edge products,” Vadiveloo said.

The Goldenson Center donated $1 million to support the research, Vadiveloo said.

Because retirement was such a hot topic, but the economy was bad, the challenge was how to market a retirement readiness index when the people had such a negative attitude toward retirement, Vadiveloo said.

“People thought they would not be able to retire because of the economy,” Vadiveloo said, “but how sustainable your retirement life is is well within your control.”

Vadiveloo said that the NRIS brought a more positive message toward retirement because it says that the individual actions you take can have an impact on retirement, it is not all based on the economy.

“The NRIS tells young people that having good health and an education can make a difference for their retirement readiness,” Vadiveloo said, “You can’t just throw your arms up and say the economy is bad there is nothing I can do. You can control your future.”

Vadiveloo and his team did 18 months of research with a team of UConn students before releasing the NRIS, and he said he was proud to release a product that was not arbitrary had so much data to support it.

Although the NRIS calculates the national retirement sustainability, you can use the information to build something more personal, Vadiveloo said.

Vadiveloo said some insurance companies have approached him to build a personal NRIS for them.

“I would imagine that since this is such a popular topic and this is such a different way at looking at it that work will pick up,” Vadiveloo said.

 

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