A New Look at the Wealth Adequacy of Older U.S. Households
We examine the current wealth adequacy of older U.S. households using the 1998-2006 waves of the Health and Retirement Study (HRS). We find that the median older U.S. household is reasonably well situated, with a ratio of comprehensive net wealth to present value poverty- line wealth of about 3.9 in 2006. About 18 percent of households, however, have less wealth than would be needed to generate 150 percent of poverty-line income over their expected future lifetimes. We see similar patterns of wealth adequacy when we examine ratios of annualized comprehensive wealth to pre-retirement earnings. Comparing the leading edge of the baby boomers in 2006 to households of the same age in 1998, we find that the baby boomers show slightly less wealth, in real terms, than their elders did, but still have appear to have adequate resources at the median. Moreover, we find a rising age profile of annualized wealth, even within households over time and after controlling for other factors, suggesting that older households are not spending their wealth as quickly as their survival probabilities are falling.
|Date of creation:||Jul 2008|
|Date of revision:|
|Publication status:||published in Review of Income and Wealth, 2008, Vol. 54(4), pp. 616-642.|
|Contact details of provider:|| Postal: Williamstown, MA 01267|
Phone: 413 597 2476
Fax: 413 597 4045
Web page: http://econ.williams.edu
More information through EDIRC
|Order Information:|| Email: |
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.:
- Engen, Eric & Gale, William & Uccello, Cori, 1999. "The Adequacy of Household Saving," MPRA Paper 56442, University Library of Munich, Germany.
- Robert Haveman & Karen Holden & Andrei Romanov & Barbara Wolfe, 2007.
"Assessing the maintenance of savings sufficiency over the first decade of retirement,"
International Tax and Public Finance,
Springer;International Institute of Public Finance, vol. 14(4), pages 481-502, August.
- Robert Haveman & Karen Holden & Barbara Wolfe & Andrei Romanov, 2005. "Assessing the Maintenance of Savings Sufficiency Over the First Decade of Retirement," CESifo Working Paper Series 1567, CESifo Group Munich.
- Shiller Robert J., 2006. "Long-Term Perspectives on the Current Boom in Home Prices," The Economists' Voice, De Gruyter, vol. 3(4), pages 1-11, March.
- Olivia S. Mitchell & James M. Poterba & Mark J. Warshawsky, 1997.
"New Evidence on the Money's Worth of Individual Annuities,"
NBER Working Papers
6002, National Bureau of Economic Research, Inc.
- Olivia S. Mitchell, 1999. "New Evidence on the Money's Worth of Individual Annuities," American Economic Review, American Economic Association, vol. 89(5), pages 1299-1318, December.
- Olivia S. Mitchell & James M. Poterba & Mark J. Warshawsky, . "New Evidence on the Money's Worth of Individual Annuities," Pension Research Council Working Papers 97-9, Wharton School Pension Research Council, University of Pennsylvania.
- Jeffrey R. Brown & James M. Poterba, 1999. "Joint Life Annuities and Annuity Demand by Married Couples," NBER Working Papers 7199, National Bureau of Economic Research, Inc.
- John Karl Scholz & Ananth Seshadri & Surachai Khitatrakun, 2004.
"Are Americans Saving "Optimally" for Retirement?,"
NBER Working Papers
10260, National Bureau of Economic Research, Inc.
- Alicia H. Munnell & Mauricio Soto, 2006. "What Replacement Rates Do Households Actually Experience In Retirement?," Working Papers, Center for Retirement Research at Boston College wp2005-10, Center for Retirement Research.
- Bernheim, B. Douglas, 1987. "The economic effects of social security : Toward a reconciliation of theory and measurement," Journal of Public Economics, Elsevier, vol. 33(3), pages 273-304, August.
- Annamaria Lusardi & Olivia S. Mitchell, 2006.
"Baby Boomer Retirement Security: the Roles of Planning, Financial Literacy, and Housing Wealth,"
NBER Working Papers
12585, National Bureau of Economic Research, Inc.
- Lusardi, Annamaria & Mitchell, Olivia S., 2007. "Baby Boomer retirement security: The roles of planning, financial literacy, and housing wealth," Journal of Monetary Economics, Elsevier, vol. 54(1), pages 205-224, January.
- Lusardi, Annamaria & Mitchell, Olivia S., 2006. "Baby boomer retirement security: The roles of planning, financial literacy, and Housing wealth," CFS Working Paper Series 2006/20, Center for Financial Studies (CFS).
- Annamaria Lusardi & Olivia S. Mitchell, 2006. "Baby Boomer Retirement Security: The Roles of Planning, Financial Literacy, and Housing Wealth," CeRP Working Papers 54, Center for Research on Pensions and Welfare Policies, Turin (Italy).
- Annamaria Lusardi & Olivia S. Mitchell, 2006. "Baby Boomer Retirement Security: The Roles of Planning, Financial Literacy, and Housing Wealth," Working Papers wp114, University of Michigan, Michigan Retirement Research Center.
- Robert Haveman & Karen Holden & Barbara Wolfe & Shane Sherlund, 2006. "Do Newly Retired Workers in the United States Have Sufficient Resources to Maintain Well-Being?," Economic Inquiry, Western Economic Association International, vol. 44(2), pages 249-264, April.
- Martin Browning & Annamaria Lusardi, 1996.
"Household Saving: Micro Theories and Micro Facts,"
96-01, University of Copenhagen. Department of Economics.
- Michael Hurd & Susann Rohwedder, 2006. "Alternative Measures of Replacement Rates," Working Papers wp132, University of Michigan, Michigan Retirement Research Center.
- Gustman, Alan L. & Steinmeier, Thomas L., 1999.
"Effects of pensions on savings: analysis with data from the health and retirement study,"
Carnegie-Rochester Conference Series on Public Policy,
Elsevier, vol. 50(1), pages 271-324, June.
- Alan L. Gustman & Thomas L. Steinmeier, 1998. "Effects of Pensions on Saving: Analysis with Data from the Health and Retirement Study," NBER Working Papers 6681, National Bureau of Economic Research, Inc.
- Willaim G. Gale & Karen M. Pence, 2006. "Are Successive Generations Getting Wealthier, and If So, Why?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 37(1), pages 155-234.
When requesting a correction, please mention this item's handle: RePEc:wil:wileco:2008-12. 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: (Stephen Sheppard)
If references are entirely missing, you can add them using this form.