Declining home values and shrinking portfolios have now unraveled the retirement safety net for a majority of American families.

Fifty-one percent of U.S. households would be unable to maintain their current standard of living in retirement even if they worked until age 65 and annuitized all their financial assets—including the value of their home—into a steady income stream, according to an updated National Retirement Risk Index released Tuesday by the Center for Retirement Research (CRR) at Boston College.

The index shows that Americans are losing ground in their readiness for retirement. In 2007, the researchers calculated, 44 percent of households were at risk of a lower standard of living in retirement. In 1989, the percentage was just 30 percent.

In a report, the CRR said that securing financial security in retirement is one of the most compelling challenges facing the nation.

“Our research shows that the financial turmoil has driven up the share of households at risk of being able to maintain their standard of living in retirement,” said CRR Director Alicia H. Munnell. “We are clearly facing a retirement crisis—one that will continue to grow as younger workers age.”

The report said the latest increase in retirement risk was largely the result of the falling values of homes and investments, declining interest rates and the fact that Social Security will replace a smaller percentage of earnings for future retirees.

The outlook for living comfortably in retirement gets worse when households factor in long-term care expenses. A CRR study this year found that 64 percent of households won’t be able to maintain their living standard in retirement if they require long-term care, even if they’re spending $3,500 a year on a comprehensive long-term care insurance policy.

Nationwide Mutual Insurance Co., which provided the CRR with financial backing to produce the index, says its own research shows that number of people who were planning for retirement before the downturn but have now “disengaged from the process” has grown by more than a third.

“It’s clear that many of these people who were planning before the downturn are now pulling away from the table. That’s exactly the opposite of what they should be doing,” says Paul Ballew, senior vice president of customer insights and analytics at Nationwide.

Carole Fleck is a senior editor at the AARP Bulletin.