Calculating Savings Rates in Working Years Needed to Maintain Living Standards in Retirement

Benefits Quarterly, Vol. 25, No. 3, pp. 31-42, 2009

16 Pages Posted: 18 Dec 2008 Last revised: 29 Sep 2009

Gaobo Pang

Northern Trust Asset Management

Mark J. Warshawsky

Towers Watson; George Mason University - Mercatus Center

Date Written: November 19, 2008

Abstract

We establish an empirically based lifecycle model to gauge savings and replacement rates for maintaining a steady living standard over life. We consider a variety of scenarios and demonstrate that savings rates vary substantially with individuals' economic and demographic situations as well as retirement plan provisions. This result highlights that meaningful retirement planning must be specific to individuals or households and be based on a comprehensive knowledge of living means and needs.

Keywords: Defined Contribution (DC), Defined Benefit (DB), Savings and Replacement Rates, Living Standard

JEL Classification: J26, D91, D12, D14

Suggested Citation

Pang, Gaobo and Warshawsky, Mark J., Calculating Savings Rates in Working Years Needed to Maintain Living Standards in Retirement (November 19, 2008). Benefits Quarterly, Vol. 25, No. 3, pp. 31-42, 2009. Available at SSRN: https://ssrn.com/abstract=1316842

Gaobo Pang (Contact Author)

Northern Trust Asset Management ( email )

50 South LaSalle Street
Chicago, IL 60603
United States
3126306980 (Phone)

HOME PAGE: http://www.northerntrust.com

Mark J. Warshawsky

Towers Watson ( email )

Arlington, VA
United States

George Mason University - Mercatus Center

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

Paper statistics

Downloads
278
Rank
89,130
Abstract Views
1,320