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Are Retirees Falling Short? Reconciling the Conflicting Evidence


  • Alicia H. Munnell
  • Matthew S. Rutledge
  • Anthony Webb


This paper examines conflicting assessments of whether people will have adequate retirement income to maintain their pre-retirement standard of living. The studies that it examines use data from the Survey of Consumer Finances (SCF), the Health and Retirement Study (HRS), and the HRS supplement Consumption and Activities Mail Survey (CAMS). Critical components of the analysis are behavioral assumptions about household consumption patterns when children leave home and when households retire. A key limitation is that the behavioral assumptions in the different studies are based on incomplete knowledge of actual household behavior. The paper found that: A simple – assumption-free – calculation of wealth to income by age clearly indicates that households retiring in the future will be less prepared than those in the past. Studies showing that households are saving optimally hinge crucially on assumptions that people are willing to accept declining consumption as they age and that they sharply reduce their consumption when the children leave home. While other studies have found consumption does not decline early in retirement, new analysis suggests that many will be unable to maintain this pace over their full retirement. The policy implications of the findings are: Households are more likely than not to be falling short in their retirement preparedness. Such shortfalls should be taken into consideration as policymakers discuss options for reforming Social Security. To bolster retirement preparedness, policymakers may want to consider ways to encourage more private saving, such as requiring 401(k)s to adopt auto-enrollment and auto-escalation policies and to apply these policies to current workers as well as new hires.

Suggested Citation

  • Alicia H. Munnell & Matthew S. Rutledge & Anthony Webb, 2014. "Are Retirees Falling Short? Reconciling the Conflicting Evidence," Working Papers, Center for Retirement Research at Boston College wp2014-16, Center for Retirement Research.
  • Handle: RePEc:crr:crrwps:wp2014-16

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    Cited by:

    1. Burtless Gary, 2015. "Trends in the Well-Being of the Aged and Their Prospects through 2030," Forum for Health Economics & Policy, De Gruyter, vol. 18(2), pages 97-118, December.
    2. Ummul Ruthbah, 2022. "The retirement puzzle," Australian Journal of Management, Australian School of Business, vol. 47(2), pages 342-367, May.
    3. Kathleen McGarry & Robert F. Schoeni, 2015. "Understanding Participation in SSI," Working Papers wp319, University of Michigan, Michigan Retirement Research Center.
    4. Gizelle Demarie Willows, 2019. "South African individual retirement savings: An analysis of the social factors," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 22(3), pages 303-328, September.
    5. Benjamin M. Friedman, 2015. "Work and Consumption in an Era of Unbalanced Technological Advance," NBER Working Papers 21713, National Bureau of Economic Research, Inc.
    6. Alice Henriques Volz & Lindsay Jacobs & Elizabeth Llanes & Kevin B. Moore & Jeffrey P. Thompson, 2020. "Wealth Distribution and Retirement Preparation among Early Savers," Working Papers 20-4, Federal Reserve Bank of Boston.
    7. Wei Sun & Teresa Ghilarducci & Michael Papadopoulos & Anthony Webb, 2019. "The Impact of a Social Security Proposal for "Catch-Up" Contributions," SCEPA working paper series. 2019-03, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    8. Ravit Rubinstein-Levi, 2021. "Disadvantaged Employees in the Trap of Defined Contribution Pension Plans," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 55-76.

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