Adequacy of Resources in Retirement

Published: 2008


We have found that on average those just past the usual retirement age are
adequately prepared for retirement in that they will be able to follow a path of
consumption that begins at their current level of consumption and then follows an agepattern similar to that of current retirees. Among singles, that pattern is similar to what would be found from a theoretically derived and estimated life-cycle model based on a CRRA utility function and historical wealth change data. Thus we do not find inadequate preparation for retirement on average or even at the median. This is not true, however, for all groups in the population. In particular, singles lacking a high school education are likely to be forced to reduce consumption: some 43% would have had to reduce initial consumption by 15 percent or more to keep the probability of running out of wealth small
(5 percent or less). 

Key Findings