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Are All Americans Saving ‘Optimally’ for Retirement?

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Listed:
  • John Karl Scholz

    (University of Wisconsin–Madison and NBER)

  • Ananth Seshadri

    (University of Wisconsin–Madison)

Abstract

Many people fear that Americans are preparing poorly for retirement. But developing rigorous evidence on this issue is difficult. In this paper we briefly discuss evidence on the adequacy of retirement wealth accumulation. We conclude that existing descriptive evidence does not seem consistent with dire assessments of poor financial preparation. We then extend the straightforward, but computationally complex dynamic programming approach used in our earlier work to assess the adequacy of retirement wealth preparation of Americans born before 1954. We find only 4 percent of HRS households have net worth below their optimal targets in 2004, though this percentage is somewhat higher for more recent HRS cohorts. While our work is preliminary, we find little evidence that Americans born before 1954 have prepared poorly for retirement.

Suggested Citation

  • John Karl Scholz & Ananth Seshadri, 2008. "Are All Americans Saving ‘Optimally’ for Retirement?," Working Papers wp189, University of Michigan, Michigan Retirement Research Center.
    • Handle: RePEc:mrr:papers:wp189
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    File URL: http://mrdrc.isr.umich.edu/publications/Papers/pdf/wp189.pdf
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    References listed on IDEAS

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    1. repec:crr:issbrf:ib2007-7-11 is not listed on IDEAS
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    5. John Karl Scholz & Ananth Seshadri & Surachai Khitatrakun, 2006. "Are Americans Saving "Optimally" for Retirement?," Journal of Political Economy, University of Chicago Press, vol. 114(4), pages 607-643, August.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Is There Really a Retirement-Savings Crisis?
      by Cody Kallen in The American on 2017-04-24 20:22:38

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    Cited by:

    1. Maarten C.J. van Rooij & Annamaria Lusardi & Rob J.M. Alessie, 2012. "Financial Literacy, Retirement Planning and Household Wealth," Economic Journal, Royal Economic Society, vol. 122(560), pages 449-478, May.
    2. John A. Tatom, 2010. "Financial Wellbeing and Some Problems in Assessing Its Link to Financial Education," NFI Working Papers 2010-WP-03, Indiana State University, Scott College of Business, Networks Financial Institute.
    3. Maarten C.J. van Rooij & Annamaria Lusardi & Rob J.M. Alessie, 2012. "Financial Literacy, Retirement Planning and Household Wealth," Economic Journal, Royal Economic Society, vol. 122(560), pages 449-478, May.
    4. Korenman, Sanders & Remler, Dahlia K. & Hyson, Rosemary T., 2021. "Health insurance and poverty of the older population in the United States: The importance of a health inclusive poverty measure," The Journal of the Economics of Ageing, Elsevier, vol. 18(C).
    5. Meryl Motika, 2019. "Personality Traits and Low Wealth at Retirement," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 45(3), pages 464-476, June.

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