While many believe that Americans are in terrible shape when it comes to being financially prepared for their “golden years,” new evidence indicates that the news may not be as dire as previously thought. Moving away from previous studies that focused on income replacement rates, a recent report from the RAND Corporation looks instead at consumption in retirement to gain a better understanding of what is needed for adequate preparation. This focus on consumption reflects the fact that spending during retirement is not flat; instead, it tends to decline with age for the vast majority of people, who spend less money on travel or other leisure activities, as well as less on transportation, clothes, and other regular expenses.
Using a rich data-focused approach, RAND researchers came to the conclusion that, overall, about 71 percent of individuals ages 66–69 are adequately economically prepared to retire, given expected consumption. Other key findings — with consequences for both individuals and policymakers — indicate large disparities across subsets of the population and highlight the significant contribution of Social Security to seniors’ financial preparation for retirement.
Almost Three-Fourths of Americans Are Adequately Prepared for Retirement, but Wide Gaps Exist
The RAND study, which looked at 633 single individuals and 1,092 married individuals ages 66–69, found that, over-all, approximately 71 percent were adequately economically prepared for retirement. In this assessment, “adequate preparation” requires that individuals have a 95- to 100-percent chance of dying with positive wealth and that reductions in remaining lifetime spending to achieve this be less than 10 percent.
As shown in the table below, a breakdown of the data by education, sex, and marital status exposes large disparities. For example, while over three-fourths of married individuals are adequately prepared, this is the case for only 55 percent of single individuals. And while married women tend to show higher levels of preparation than married men, single women fare considerably worse than single men. Particularly large differences emerge when splitting the sample by education: Among married individuals, some 89 percent of college graduates are prepared, compared with only 70 percent of those lacking a high school education. Among single individuals, 69 percent of college graduates are prepared, but for single individuals who did not complete high school, this number drops to only 36 percent. At the most extreme end, single women with low education (less than high school) are at a particular disadvantage: Only 29 percent are adequately prepared for retirement.
Chosen excerpts by Job Market Monitor. Read the whole story at More Americans May Be Adequately Prepared for Retirement Than Previously Thought | RAND.
Retirement savings for about a quarter of Americans amounts to … $0. One in every four Americans is not saving for retirement at all, either because they are not thinking about it, do not really know how or, worse, do not feel they can afford to, according to a report by Country Financial. Americans ages … Continue reading
“With so many Baby Boomers planning to work longer and retire later, they are taking steps to stay marketable,” says Catherine Collinson, president of the non-profit Transamerica Center for Retirement Studies, which commissioned the national survey of 4,143 full-time and part-time workers conducted this winter by Harris Poll. Although many Baby Boomers want to shift … Continue reading
The average age at which U.S. retirees report retiring is 62, the highest Gallup has found since first asking Americans this question in 1991. This age has increased in recent years, while the average age at which non-retired Americans expect to retire, 66, has largely stayed the same. However, this age too has slowly increased … Continue reading
America has a retirement crisis, but it’s not what some people want you to believe it is. It’s not the defined benefit pension plans that public employees pay into over a lifetime of work, which provide retirees an average of $23,400 annually (although some public officials fail to make their required contributions to these and … Continue reading
A firm majority of Americans, 59%, are worried about not having enough money for retirement, surpassing eight other financial matters. A majority of Americans have reported being “very” or “moderately” worried about retirement savings every year since 2001, illustrating that saving for retirement disquiets Americans in both good and bad economic times. via Retirement Remains …Continue reading
Earlier this week, Encore asked the rhetorical question: “Do you have to be a bleeding heart to believe that it’s hard to save money when you aren’t making money?” The occasion was the publication of the annual Retirement Confidence Survey, which yielded the palm-smack-to-the-forehead statistic that 36% of Americans had saved $1,000 or less for … Continue reading
US / 40% of the self-employed are not saving regularly for retirement, and 28% are not saving at all survey finds
Many of us have dreams of leaving the 9-to-5 grind and working for ourselves. And since the 2008 financial crisis, many have done it — even if some didn’t really have a choice. But many of these budding entrepreneurs, and even the people who have owned their businesses for years, are part of a growing … Continue reading
ue to increases in Social Security’s Delayed Retirement Credit, the effective retirement age is now 70, with monthly benefits reduced for earlier claiming Continue reading
The line between working and retirement is shifting for many americans ages 50 and older, with some currently or expecting to continue working for pay during retirement Continue reading
The 2013 edition of the Melbourne Mercer Global Pension Index (PDF), a ranking of national retirement systems around the world, has the U.S. ranked 11th, down two slots from last yearContinue reading
The current retirement system has left the vast majority of Americans unprepared for retirement says EPI. While high-income Americans have benefitted enormously from the rise of 401(k)s, most Americans are being left behind Continue reading
In 2013, 22 percent of all workers planned to postpone their retirement Continue reading
The Damaged Nest Egg: Un/Underemployment Results in Withdrawals from Retirement Funds -A sizeable majority of the un/underemployed (62 percent) are not too/not at all confident that they will be able to retire comfortably Continue reading
A new report from the National Institute on Retirement Security, based on analysis of the 2010 Survey of Consumer Finances, shows that about 45 percent of all working-age households don’t hold any retirement account assets, whether in an employer-sponsored 401(k) type plan or an individual retirement account Continue reading
‘In order to address an immediate and long-term funding problem, the Social Security Amendments of 1983 gradually increased the Full Retirement Age (FRA), changed the actuarial adjustment for individuals claiming benefits between the early and full retirement ages, and increased the delayed retirement credit. Together, these changes increase the financial gain to individuals who delay …Continue reading
ICI recently released their retirement plan data through Q3 of 2012. The chart of the day shows the real (inflation adjusted) total retirement market assets per working age citizen in the U.S. This includes IRA’s, defined contribution plans, private defined benefit plans, state and local government pension plans, federal pension plans, and annuities. The good … Continue reading
Retirement security for those currently or recently in the middle class is no sure thing. 49% of the private work force has neither defined benefit (traditional pensions) or defined contribution (401(k)) retirement plans, while public sector pensions are coming under increasing attack. The United States has the highest elder poverty rate, 25% (measured as 50% … Continue reading
US / Delaying retirement / From 42% in 2010 to 62% in 2012 among workers between the ages of 45 and 60
According to a new report released by The Conference Board, older workers intend to postpone their retirement now more than ever, despite a recovering U.S. economy. Using data from the August 2012 Consumer Confidence Survey, Trapped on the Worker Treadmill? documented a sharp increase in plans to delay retirement among workers between the ages of 45 … Continue reading
A business group of top executives on Wednesday proposed reforms to Social Security and Medicare that would raise the enrollment age for both programs to 70 but not raise Social Security taxes paid by upper-income Americans. The Business Roundtable, which represents more than 200 chief executives from some of the largest U.S. corporations, also urged … Continue reading
Private industry employers now spend more per employee hour worked for defined contribution retirement plans (retirement plans that specify the level of employer contributions and place those contributions into individual employee accounts) than for defined benefit retirement plans (plans that provide employees with guaranteed retirement benefits that are based on a benefit formula). March 2012 … Continue reading
The release of the Federal Reserve’s 2010 Survey of Consumer Finances is a great opportunity to eeassess Americans’ retirement preparedness as measured by the National Retirement Risk Index (NRRI) write Alicia H. Munnell, Anthony Webb, and Francesca Golub-Sass in The National Retirement Risk Index: An Update. (Choosen excerpts by JMM to follow) NRRI shows the share …Continue reading
A new economic impact study finds that pension benefit expenditures provide important economic support to the economy, including more than $943 billion in total economic output and 6.2 million jobs in the United States. Pensionomics 2014: Measuring the Economic Impact of Defined Benefit Pension Expenditures reports the national economic impacts of public and private pension … Continue reading