How Much is the Working-Age Population Saving?

27 Pages Posted: 23 Jun 2008

See all articles by Alicia H. Munnell

Alicia H. Munnell

Boston College - Center for Retirement Research

Francesca Golub-Sass

Boston College - Center For Retirement Research (CRR)

Andrew Varani

Boston College - Center for Retirement Research

Date Written: October 2005

Abstract

This paper addresses how much individuals are saving for retirement. The standard measure, the personal saving rate reported in the official U.S. National Income and Product Accounts (NIPA), has fallen dramatically and in 2004 stood at a dismal 1.8 percent of disposable personal income. But is this indicator an accurate measure of saving behavior? NIPA combines the saving of the working-age population with the dissaving of retirees. This study attempts to separate the saving of these two groups.

Three conclusions emerge from the analysis. First, adjusting the NIPA personal saving rate shows that personal saving by the working-age population is significantly higher than the reported national rate. Moreover, allocating a portion of business saving to workingage households further raises their saving rate. Second, commentators should be careful not to double count saving through employer-sponsored plans by referring to pension saving and personal saving as if they were different components. In fact, for most of the time between 1980 and 2003, pension saving accounted for all of personal saving. Finally, the analysis (inadvertently) helps explain the puzzle surrounding the collapse of the total NIPA personal saving rate beginning in the early 1980s. While capital gains were part of the story in the 1990s, most of the downward trend can be explained by changes in the saving rate of those 65 and over.

Suggested Citation

Munnell, Alicia and Golub-Sass, Francesca and Varani, Andrew, How Much is the Working-Age Population Saving? (October 2005). Available at SSRN: https://ssrn.com/abstract=1150205 or http://dx.doi.org/10.2139/ssrn.1150205

Alicia Munnell (Contact Author)

Boston College - Center for Retirement Research ( email )

Fulton Hall 550
Chestnut Hill, MA 02467
United States
617-552-1762 (Phone)

Francesca Golub-Sass

Boston College - Center For Retirement Research (CRR) ( email )

Chestnut Hill, MA 02167
United States

Andrew Varani

Boston College - Center for Retirement Research ( email )

Fulton Hall 550
Chestnut Hill, MA 02467
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
49
Abstract Views
730
PlumX Metrics