Measuring the Adequacy of Retirement Savings

Measuring retirement income adequacy: calculating realistic income replacement rates.

• The limitations of traditional “replacement rate” calculations: For decades, “replacement rates” have been the primary “rule-of-thumb” measure used in the retirement planning process. However, replacement rate calculations are overly simplistic and potentially inaccurate because they often are based on methodologies limited to replacement of preretirement cash flow after adjustment for taxes,...

Adequacy of Resources in Retirement

The Adequacy of Economic Resources in Retirement

The most common metric for assessing the adequacy of economic preparation for retirement is the income replacement rate, the ratio of income after retirement to income before retirement. However both economic theory and common sense say that someone is adequately prepared if she is able to maintain her level of economic well-being, which is not the same as maintaining her level of income or som...

Tax Policy and Retirement Savings ∗

Governments around the world spend hundreds of billions of dollars subsidizing retirement savings through various tax preferences. This paper reviews the economics literature on retirement savings, with a particular focus on recent advances using behavioral economics and high-quality administrative data. This literature suggests that tax subsidies may not be an effective policy to increase reti...

Savings after retirement: A survey;

Retired U.S. households, especially those with high income, decumulate their assets more slowly than implied by the basic life cycle model. The observed patterns of outof-pocket medical expenses, which rise quickly with age and income during retirement, and longevity, which also rises with income, can explain a significant portion of U.S. retirement saving. However, more work is needed to disen...