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


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.


Social security Retirement Savings Pensions Well-being Poverty 


D31 H55 J26 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Antonovics, K., Haveman, R., Holden, K., & Wolfe, B. (2000). Attrition in the national beneficiary survey and follow-up, and its correlates. Social Security Bulletin, 1(1), 1–7. Google Scholar
  2. Bernheim, B. D. (1992). Is the baby boom generation preparing adequately for retirement?. New York: Merrill Lynch and Company. Google Scholar
  3. Bernheim, B. D., Skinner, J., & Weinberg, S. (2001). What accounts for the variation in retirement wealth among U.S. households?. American Economic Review, 91(4), 832–857. CrossRefGoogle Scholar
  4. Boskin, M., & Shoven, J. (1987). Concept and measures of earnings replacement rates during retirement. In Z. Bodie, J. Shoven, & D. Wise (Eds.), Pensions and retirement in the United States (pp. 113–141). Chicago: University of Chicago Press for NBER. Google Scholar
  5. Citro, C. F., & Michael, R. T. (Eds.). (1995). Measuring poverty: a new approach. National Research Council, Panel on Poverty Statistics and Welfare Benefits, Committee on National Statistics, Washington, DC: National Academy Press. Google Scholar
  6. Engen, E. M., Gale, W. G., & Uccello, C. E. (1999). The adequacy of household saving. Brookings Papers on Economic Activity, 2, 65–187. CrossRefGoogle Scholar
  7. Grad, S. (1990). Earnings replacement rates of new retired workers. Social Security Bulletin, 53(10), 2–19. Google Scholar
  8. Gustman, A. L., & Steinmeier, T. L. (1998). Effects of pensions on saving: analysis with data from the health and retirement study. NBER Working Paper No. 6681, National Bureau of Economic Research, Cambridge, MA. Google Scholar
  9. Haveman, R., Holden, K., Wolfe, B., & Sherlund, S. (2006). Have newly retired workers in the US saved enough to maintain well-being through retirement years?. Economic Inquiry, 44(2), 249–264. CrossRefGoogle Scholar
  10. Mitchell, O., & Moore, J. (1998). Can Americans afford to retire? New evidence on retirement savings adequacy. The Journal of Risk and Insurance, 65(3), 371–400. CrossRefGoogle Scholar
  11. Mitchell, O., Moore, J., & Phillips, J. (2000). Explaining retirement saving shortfalls. In O. S. Mitchell, B. Hammond, & A. Rappaport (Eds.), Forecasting retirement needs and retirement wealth. Philadelphia: University of Pennsylvania Press. Google Scholar
  12. Moore, J., & Mitchell, O. S. (2000). Projected retirement wealth and saving adequacy. In O. S. Mitchell, B. Hammond, & A. Rappaport (Eds.), Forecasting retirement needs and retirement wealth. Philadelphia: University of Pennsylvania Press. Google Scholar
  13. US Congressional Budget Office. (2003). Baby boomers’ retirement prospects: an overview. Washington: Congressional Budget Office. Google Scholar
  14. US Department of Health and Human Services, Public Health Service, National Center for Health Statistics. (1997). US decennial life tables for 1989–91, Vol. 1, Number 1. Hyattsville, Maryland. Google Scholar
  15. Walker, L. (2004). Elderly households and housing wealth: do they use it or lose it? Michigan Retirement Research Center (Working Paper No. 2004-070), University of Michigan, Ann Arbor, MI. Google Scholar
  16. Wolff, E. N. (2002). Retirement insecurity: the income shortfalls awaiting the soon-to-retire. Washington: Economic Policy Institute. Google Scholar
  17. Ycas, M. A. (1992). The new beneficiary data system: the first phase. Social Security Bulletin, 55(2), 20–35. Google Scholar

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

Personalised recommendations