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

Pang, Gaobo; Warshawsky, Mark J.

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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

See all articles by Gaobo Pang

Mark J. Warshawsky

Towers Watson; Mercatus Center at George Mason University

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: 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