IDEAS home Printed from https://ideas.repec.org/a/ucp/jlabec/v21y2003i4p755-782.html
   My bibliography  Save this article

Trends and Projections in Income Replacement during Retirement

Author

Listed:
  • James P. Smith

    (RAND Corporation)

Abstract

This article calculates retirement incomereplacement rates for all labor market cohorts across the last 25 years and describes the changing contributions made by private pensions, social security, and assets. The factors on which replacement rates are sensitive include position in the income distribution, the use of after-tax instead of pretax incomes, the changing family composition of households between their pre- and postretirement years, and differential underreporting of income by age. The debate about reforming the U.S. retirement income system starts from a base where the current system offers high income-replacement rates for most households, especially low-income households.

Suggested Citation

  • James P. Smith, 2003. "Trends and Projections in Income Replacement during Retirement," Journal of Labor Economics, University of Chicago Press, vol. 21(4), pages 755-782, October.
    • Handle: RePEc:ucp:jlabec:v:21:y:2003:i:4:p:755-782
    DOI: 10.1086/376957
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/376957
    File Function: main text
    Download Restriction: Access to the online full text or PDF requires a subscription.
    File URL: https://libkey.io/10.1086/376957?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Banks, James & Blundell, Richard & Tanner, Sarah, 1998. "Is There a Retirement-Savings Puzzle?," American Economic Review, American Economic Association, vol. 88(4), pages 769-788, September.
    2. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1.
    3. Michael Hurd & F. Thomas Juster & James P. Smith, 2003. "Enhancing the Quality of Data on Income: Recent Innovations from the HRS," Journal of Human Resources, University of Wisconsin Press, vol. 38(3).
    4. Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, in: A Theory of the Consumption Function, pages 1-6, National Bureau of Economic Research, Inc.
    5. B. Douglas Bernheim & Jonathan Skinner & Steven Weinberg, 2001. "What Accounts for the Variation in Retirement Wealth among U.S. Households?," American Economic Review, American Economic Association, vol. 91(4), pages 832-857, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Guozhong Zhu, 2014. "Household Finance: Education, Permanent Income and Portfolio Choice," 2014 Meeting Papers 553, Society for Economic Dynamics.
    2. Flood, Lennart & Klevmarken, Anders & Mitrut, Andreea, 2006. "The income of the Swedish baby boomers," Working Papers in Economics 209, University of Gothenburg, Department of Economics.
    3. Kluth, Sebastian & Gasche, Martin, 2013. "Ersatzraten in der Gesetzlichen Rentenversicherung," MEA discussion paper series 201311, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    4. Frank T. Denton & Ross Finnie & Byron G. Spencer, 2009. "Income Replacement in Retirement: Longitudinal Evidence from Income Tax Records," Social and Economic Dimensions of an Aging Population Research Papers 261, McMaster University.
    5. Finnie, Ross & Spencer, Byron G., 2013. "How do the level and composition of income change after retirement? Evidence from the LAD," CLSSRN working papers clsrn_admin-2013-21, Vancouver School of Economics, revised 29 Apr 2013.
    6. Nicholas-James Clavet & Mayssun El-Attar & Raquel Fonseca, 2022. "Replacement Rates of Public Pensions in Canada: Heterogeneity across SocioEconomic Status," Cahiers de recherche / Working Papers 2202, Chaire de recherche sur les enjeux économiques intergénérationnels / Research Chair in Intergenerational Economics.
    7. Russell Cooper & Guozhong Zhu, 2013. "Household Finance: Education, Permanent Income and Portfolio Choice," NBER Working Papers 19455, National Bureau of Economic Research, Inc.
    8. Kevin Wood, 2019. "Health insurance reform and retirement: Evidence from the Affordable Care Act," Health Economics, John Wiley & Sons, Ltd., vol. 28(12), pages 1462-1475, December.
    9. Picot, Garnett & Larochelle-Cote, Sebastien & Myles, John, 2008. "Securite et stabilite du revenu a la retraite au Canada," Direction des études analytiques : documents de recherche 2008306f, Statistics Canada, Direction des études analytiques.
    10. Honghao Ren & Henk Folmer & Arno J. Van der Vlist, 2018. "The Impact of Home Ownership on Life Satisfaction in Urban China: A Propensity Score Matching Analysis," Journal of Happiness Studies, Springer, vol. 19(2), pages 397-422, February.
    11. Douglas Hershey & Joy Jacobs-Lawson, 2012. "Bridging the Gap: Anticipated Shortfalls in Future Retirement Income," Journal of Family and Economic Issues, Springer, vol. 33(3), pages 306-314, September.
    12. Picot, Garnett & Larochelle-Cote, Sebastien & Myles, John, 2008. "Income Security and Stability During Retirement in Canada," Analytical Studies Branch Research Paper Series 2008306e, Statistics Canada, Analytical Studies Branch.
    13. Edward N. Wolff, 2006. "The Adequacy of Retirement Resources among the Soon-to-Retire, 1983-2001," Economics Working Paper Archive wp_472, Levy Economics Institute.
    14. Sanders, E.A.T., 2011. "Annuity market imperfections," Other publications TiSEM 227f9684-ccba-4646-99bc-3, Tilburg University, School of Economics and Management.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. El Mekkaoui de Freitas, Najat & Oliveira Martins, Joaquim, 2014. "Health, pension benefits and longevity: How they affect household savings?," The Journal of the Economics of Ageing, Elsevier, vol. 3(C), pages 21-28.
    2. Nivorozhkina, Ludmila & Nivorozhkin, Anton & Abazieva, Kamilla, 2010. "Drop in consumption associated with retirement. The regression discontinuity design approach," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 19(3), pages 112-126.
    3. D'Orlando, Fabio & Sanfilippo, Eleonora, 2010. "Behavioral foundations for the Keynesian consumption function," Journal of Economic Psychology, Elsevier, vol. 31(6), pages 1035-1046, December.
    4. Mark Aguiar & Erik Hurst, 2013. "Deconstructing Life Cycle Expenditure," Journal of Political Economy, University of Chicago Press, vol. 121(3), pages 437-492.
    5. Koç, E., 2015. "Job Finding, Job Loss and Consumption Behaviour," Other publications TiSEM 257b35a1-8c5c-4662-88db-a, Tilburg University, School of Economics and Management.
    6. Andrea Repetto, 2001. "Incentivos al ahorro personal: Lecciones de la economía del comportamiento," Central Banking, Analysis, and Economic Policies Book Series, in: Felipe Morandé & Rodrigo Vergara & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Edit (ed.),Análisis Empírico del Ahorro en Chile, edition 1, volume 1, chapter 7, pages 191-240, Central Bank of Chile.
    7. van de Ven, Justin, 2011. "A structural dynamic microsimulation model of household savings and labour supply," Economic Modelling, Elsevier, vol. 28(4), pages 2054-2070, July.
    8. Beznoska, Martin & Steiner, Viktor, 2012. "Does consumption decline at retirement? Evidence from repeated cross-section data for Germany," Discussion Papers 2012/14, Free University Berlin, School of Business & Economics.
    9. Miriam Beblo & Sven Schreiber, 2022. "Leisure and housing consumption after retirement: new evidence on the life-cycle hypothesis," Review of Economics of the Household, Springer, vol. 20(1), pages 305-330, March.
    10. Koç, E., 2015. "Job Finding, Job Loss and Consumption Behaviour," Discussion Paper 2015-015, Tilburg University, Center for Economic Research.
    11. Domeij David & Johannesson Magnus, 2006. "Consumption and Health," The B.E. Journal of Macroeconomics, De Gruyter, vol. 6(1), pages 1-30, May.
    12. Pablo Mira, 2023. "Consumption and Fluctuations: What Role for Behavioral Economics?," Ensayos Económicos, Central Bank of Argentina, Economic Research Department, vol. 1(82), pages 98-127, November.
    13. Patti Fisher, 2013. "Is There Evidence of Loss Aversion in Saving Behaviors in Spain?," Journal of Family and Economic Issues, Springer, vol. 34(1), pages 41-51, March.
    14. repec:dau:papers:123456789/12130 is not listed on IDEAS
    15. Christopher J. Kurz & Geng Li & Daniel J. Vine, 2018. "Are Millennials Different?," Finance and Economics Discussion Series 2018-080, Board of Governors of the Federal Reserve System (U.S.).
    16. Dutt, Satyajit & Radermacher, Jan W., 2023. "Age, wealth, and the MPC in Europe: A supervised machine learning approach," SAFE Working Paper Series 383, Leibniz Institute for Financial Research SAFE.
    17. Klos, Alexander & Rottke, Simon, 2013. "Saving and Consumption When Children Move Out," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79786, Verein für Socialpolitik / German Economic Association.
    18. Muñoz, Sònia, 2004. "Real effects of regional house prices: dynamic panel estimation with heterogeneity," LSE Research Online Documents on Economics 24704, London School of Economics and Political Science, LSE Library.
    19. Päivi Kankaanranta, 2006. "Consumption Over the Life Cycle: A Selected Literature Review," Discussion Papers 7, Aboa Centre for Economics.
    20. Erik Hurst, 2004. "Grasshoppers, Ants and Pre-Retirement Wealth: A Test of Permanent Income Consumers," Working Papers wp088, University of Michigan, Michigan Retirement Research Center.
    21. Velarde, Melanie & Herrmann, Roland, 2014. "How retirement changes consumption and household production of food: Lessons from German time-use data," The Journal of the Economics of Ageing, Elsevier, vol. 3(C), pages 1-10.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jlabec:v:21:y:2003:i:4:p:755-782. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JOLE .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.