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International Tax and Public Finance

, Volume 14, Issue 4, pp 481–502 | Cite as

Assessing the maintenance of savings sufficiency over the first decade of retirement

  • Robert Haveman
  • Karen Holden
  • Andrei Romanov
  • Barbara WolfeEmail author
Article

Abstract

The goal of securing adequate resources in retirement dominates the ongoing debate regarding social security reforms designed to accommodate the demographic transformation and to provide minimum income security to retired workers. Policy proposals concerned with the implication of future public sector costs emphasize greater individual responsibility for meeting retirement resource goals. Proposals seeking minimum living standards imply expansion of public fiscal liabilities. We contribute to this discussion by examining the extent to which a cohort of US retirees were able to meet resource adequacy standards at the time of retirement, and to maintain initial levels of resources over the first decade of retirement. We compare annuitized wealth, including social security and pension wealth, to two adequacy standards—a household’s preretirement earnings (reflecting the goal of maintaining preretirement consumption) and the US poverty threshold (reflecting the goal of meeting minimum consumption standards). We analyze the relationship of individual characteristics to changes in resource adequacy over time, and identify the characteristics of those who gain and lose resources over the first decade of retirement. Finally, we simulate the effects on adequacy and public sector benefit costs of four social insurance policy proposals.

Keywords

Social security Retirement Savings Pensions Well-being Poverty 

JEL

D31 H55 J26 

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Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  • Robert Haveman
    • 1
  • Karen Holden
    • 1
  • Andrei Romanov
    • 1
  • Barbara Wolfe
    • 2
    Email author
  1. 1.University of Wisconsin-MadisonMadisonUSA
  2. 2.La Follette School of Public AffairsUniversity of Wisconsin-MadisonMadisonUSA

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