Do U.S. retired workers have sufficient resources? An assessment of savings adequacy and estimation methods as life extends

Karen Holden, University of Wisconsin at Madison

Data from the New Beneficiary Study are used to study the adequacy of savings at retirement and over the first decade of retirement. We assess the adequacy of financial and property holdings, of realized and expected pensions and of Social Security wealth. We describe distributional differences in adequacy. A major focus is the sensitivity of assumptions and estimation procedures on conclusions about savings adequacy and its distribution across individuals. We use two definitions of “adequacy.” One compares the level of retirement resources to preretirement living standards. A second compares resources to a social standard (e.g., poverty threshold) of resource needs. Each captures a different concept of adequacy; we examine the (different) policy implications of each. Estimates are sensitive to life expectancy assumptions; we discuss (and present alternative estimates) of how probable changes in life expectancy affect projected resource needs of individuals over their remaining lifetimes.