Retirement wealth and its adequacyAssessing the impact of changes in the age of eligibility for full Social Security benefits

Retirement wealth and its adequacy

Assessing the impact of changes in the age of eligibility for full Social Security benefits

Montalto

Catherine P.

Montalto, Catherine P.

Author

text

working paper

Chestnut Hill, Mass. Center for Retirement Research at Boston College20012001monographic

Chestnut Hill, Mass.

Center for Retirement Research at Boston College

2001

monographic

Englisheng

English

eng

electronicapplication/pdfborn digital

electronic

application/pdf

born digital

This paper assesses whether the accumulated retirement wealth of pre-retirees will be adequate to cover needs during retirement, and how variation in age of eligibility for Social Security benefits affects adequacy. Data from the 1998 Survey of Consumer Finances are analyzed to assess the adequacy and composition of retirement wealth of U.S. households, and simulations are used to assess the impact of changes in the Social Security system. Unique contributions of the research include use of household specific information on portfolio allocation and planned retirement age, projection of retirement wealth using asset specific growth rates, and estimation of retirement needs based on household expenditure functions.

The findings reveal that the average U.S. household receives approximately 46% of retirement wealth from Social Security, 39% from personal savings, and 14% from pensions. Approximately 56% of U.S. households are on track to be able to maintain their pre-retirement consumption level in retirement. However, retirement wealth adequacy rates and retirement wealth to needs ratios both increase with planned retirement age of the householder. Based on simulations, the impact of changes in the age of eligibility for full Social Security benefits on retirement wealth adequacy depends on behavioral responses to these changes.

Catherine P. Montalto.

CRR WP2001-7

CRR WP

2001-7

http://crr.bc.edu/images/stories/Working_Papers/wp_2001-07.pdf

MChBEnglisheng

MChB

Englisheng

English

eng