IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Are You Sure You're Saving Enough for Retirement?

  • Jonathan Skinner

Many observers believe current aging baby boomers are woefully unprepared for retirement. Others raise the prospect that Americans are saving too much for retirement. This paper attempts to reconcile these contrasting views using a simple life cycle model and a more sophisticated retirement program, ESPlanner, with special reference to retirement prospects for economists. I find most households with post-graduate degrees fall short of the wealth needed to smooth spending through retirement. Of course, there are ways to economize during retirement: stepping up household production (cooking at home rather than eating out), selling one's house, or maintaining the modest individual consumption levels from when children still roamed the house. But ultimately, I argue these laudable strategies to reduce retirement expenses will be dwarfed by rapidly growing out-of-pocket medical expenses. The combination of eroding retiree health benefits and the risk of catastrophic future out-of-pocket health spending suggests that even conventional retirement planning recommendations could be too low.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.nber.org/papers/w12981.pdf
Download Restriction: no

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12981.

as
in new window

Length:
Date of creation: Mar 2007
Date of revision:
Publication status: published as Jonathan Skinner, 2007. "Are You Sure You’re Saving Enough for Retirement?," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 59-80, Summer.
Handle: RePEc:nbr:nberwo:12981
Note: AG HC PE
Contact details of provider: Postal:
National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.

Phone: 617-868-3900
Web page: http://www.nber.org
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Steven F. Venti & David A. Wise, 1989. "Aging, Moving, and Housing Wealth," NBER Chapters, in: The Economics of Aging, pages 9-54 National Bureau of Economic Research, Inc.
  2. Katharine L. Bradbury & Helen F. Ladd, 1987. "City Taxes and Property Tax Bases," NBER Working Papers 2197, National Bureau of Economic Research, Inc.
  3. Mark J. Warshawsky & John Ameriks, . "How Prepared Are Americans for Retirement?," Pension Research Council Working Papers 98-11, Wharton School Pension Research Council, University of Pennsylvania.
  4. Orazio Attanasio & James Banks & Costas Meghir & Guglielmo Weber, 1995. "Humps and bumps in lifetime consumption," IFS Working Papers W95/14, Institute for Fiscal Studies.
  5. R. Glenn Hubbard & Jonathan Skinner & Stephen P. Zeldes, 1994. "Precautionary Saving and Social Insurance," NBER Working Papers 4884, National Bureau of Economic Research, Inc.
  6. 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.
  7. B. Douglas Bernheim & Antonio Rangel, 2005. "Behavioral Public Economics: Welfare and Policy Analysis with Non-Standard Decision-Makers," NBER Working Papers 11518, National Bureau of Economic Research, Inc.
  8. Keith A. Bender, 2004. "The Well-Being of Retirees: Evidence Using Subjective Data," Working Papers, Center for Retirement Research at Boston College wp2004-24, Center for Retirement Research.
  9. Mark Aguiar & Erik Hurst, 2007. "Life-Cycle Prices and Production," American Economic Review, American Economic Association, vol. 97(5), pages 1533-1559, December.
  10. John Ameriks & Andrew Caplin & John Leahy, 2002. "Retirement Consumption: Insights from a Survey," NBER Working Papers 8735, National Bureau of Economic Research, Inc.
  11. Gilbert Ghez & Gary S. Becker, 1975. "The Allocation of Time and Goods over the Life Cycle," NBER Books, National Bureau of Economic Research, Inc, number ghez75-1, 08.
  12. Michael Hurd & Julie Zissimopoulos, 2003. "Saving for Retirement: Wage Growth and Unexpected Events," Working Papers wp045, University of Michigan, Michigan Retirement Research Center.
  13. Steven F. Venti & David A. Wise, 2001. "Aging and Housing Equity: Another Look," NBER Working Papers 8608, National Bureau of Economic Research, Inc.
  14. Brigitte C. Madrian & Dennis F. Shea, 2001. "The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 116(4), pages 1149-1187.
  15. Annamaria Lusardi & Olivia S. Mitchell, 2011. "Financial Literacy and Planning: Implications for Retirement Wellbeing," NBER Working Papers 17078, National Bureau of Economic Research, Inc.
  16. B. Douglas Bernheim & Solange Berstein, 2002. "Saving and Life Insurance Holdings at Boston University – A Unique Case Study," Working Papers Central Bank of Chile 161, Central Bank of Chile.
  17. John Sabelhaus & Joyce Manchester, 1995. "Baby Boomers and Their Parents: How Does Their Economic Well-Being Compare in Middle Age?," Journal of Human Resources, University of Wisconsin Press, vol. 30(4), pages 791-806.
  18. Michael D. Hurd & Susann Rohwedder, 2006. "Some Answers to the Retirement-Consumption Puzzle," NBER Working Papers 12057, National Bureau of Economic Research, Inc.
  19. Timothy Smeeding & Barbara Boyle Torrey & Jonathon Fisher & David S. Johnson & Joseph Marchand, 2006. "No Place Like Home: Older Adults and Their Housing," Working Papers, Center for Retirement Research at Boston College wp2006-16, Center for Retirement Research.
  20. Schwerdt, Guido, 2005. "Why does consumption fall at retirement? Evidence from Germany," Economics Letters, Elsevier, vol. 89(3), pages 300-305, December.
  21. Ladd, Helen F. & Bradbury, Katharine L., 1988. "City Taxes and Property Tax Bases," National Tax Journal, National Tax Association, vol. 41(4), pages 503-23, December.
  22. B. Douglas Bernheim & Lorenzo Forni & Jagadeesh Gokhale & Laurence J. Kotlikoff, 2000. "How much should Americans be saving for retirement?," Working Paper 0002, Federal Reserve Bank of Cleveland.
  23. James P. Smith, 2003. "Consequences and Predictors of New Health Events," NBER Working Papers 10063, National Bureau of Economic Research, Inc.
  24. Sun Wei & Triest Robert K. & Webb Anthony, 2008. "Optimal Retirement Asset Decumulation Strategies: The Impact of Housing Wealth," Asia-Pacific Journal of Risk and Insurance, De Gruyter, vol. 3(1), pages 1-29, September.
  25. Pauly, Mark V, 1990. "The Rational Nonpurchase of Long-term-Care Insurance," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 153-68, February.
  26. Eric M. Engen & William G. Gale & Cori R. Uccello, 1999. "The Adequacy of Retirement Saving," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 30(2), pages 65-188.
  27. John Ameriks & Andrew Caplin & John Leahy, 2003. "Wealth Accumulation and the Propensity to Plan," The Quarterly Journal of Economics, Oxford University Press, vol. 118(3), pages 1007-1047.
  28. Mark Aguiar & Erik Hurst, 2005. "Consumption versus Expenditure," Journal of Political Economy, University of Chicago Press, vol. 113(5), pages 919-948, October.
  29. Eric French & John Bailey Jones, 2004. "On the distribution and dynamics of health care costs," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(6), pages 705-721.
  30. Shlomo Benartzi & Richard Thaler, 2007. "Heuristics and Biases in Retirement Savings Behavior," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 81-104, Summer.
  31. Kerwin Kofi Charles, 2002. "Is Retirement Depressing?: Labor Force Inactivity and Psychological Well-Being in Later Life," NBER Working Papers 9033, National Bureau of Economic Research, Inc.
  32. Jamaes P. Ziliak & Thomas J. Kniesner, 2003. "The Effect of Income Taxation on Consumption and Labor Supply," Center for Policy Research Working Papers 54, Center for Policy Research, Maxwell School, Syracuse University.
  33. John Karl Scholz & Ananth Seshadri & Surachai Khitatrakun, 2004. "Are Americans Saving "Optimally" for Retirement?," NBER Working Papers 10260, National Bureau of Economic Research, Inc.
  34. JohnKarl Scholz & Ananth Seshadri, 2007. "Children and Household Wealth," Working Papers wp158, University of Michigan, Michigan Retirement Research Center.
  35. James J. Choi & David Laibson & Brigitte C. Madrian & Andrew Metrick, 2004. "Saving or Retirement on the Path of Least Resistance," Levine's Bibliography 122247000000000606, UCLA Department of Economics.
  36. Jonathan Skinner & Stephen P. Zeldes, 2002. "The Importance of Bequests and Life-Cycle Saving in Capital Accumulation: A New Answer," American Economic Review, American Economic Association, vol. 92(2), pages 274-278, May.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:12981. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.