NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Are You Sure You're Saving Enough for Retirement?

Jonathan Skinner

NBER Working Paper No. 12981
Issued in March 2007
NBER Program(s):   AG   HC   PE

Many observers believe current aging baby boomers are woefully unprepared for retirement. Others raise the prospect that Americans are saving too much for retirement. This paper attempts to reconcile these contrasting views using a simple life cycle model and a more sophisticated retirement program, ESPlanner, with special reference to retirement prospects for economists. I find most households with post-graduate degrees fall short of the wealth needed to smooth spending through retirement. Of course, there are ways to economize during retirement: stepping up household production (cooking at home rather than eating out), selling one's house, or maintaining the modest individual consumption levels from when children still roamed the house. But ultimately, I argue these laudable strategies to reduce retirement expenses will be dwarfed by rapidly growing out-of-pocket medical expenses. The combination of eroding retiree health benefits and the risk of catastrophic future out-of-pocket health spending suggests that even conventional retirement planning recommendations could be too low.

download in pdf format
   (364 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

This paper is available as PDF (364 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w12981

Published: Jonathan Skinner, 2007. "Are You Sure You’re Saving Enough for Retirement?," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 59-80, Summer. citation courtesy of

Users who downloaded this paper also downloaded these:
Scholz, Seshadri, and Khitatrakun w10260 Are Americans Saving "Optimally" for Retirement?
Lusardi and Mitchell w17078 Financial Literacy and Planning: Implications for Retirement Wellbeing
Mankiw w12349 The Macroeconomist as Scientist and Engineer
Beshears, Choi, Laibson, and Madrian The Importance of Default Options for Retirement Saving Outcomes: Evidence from the United States
Lusardi w13824 Household Saving Behavior: The Role of Financial Literacy, Information, and Financial Education Programs
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us