Consideration of Retirement Income Stages in Planning for Retirement

Journal of Personal Finance, 13(1), 52-64, 2014

13 Pages Posted: 20 Mar 2014

See all articles by Kyoung Tae Kim

Kyoung Tae Kim

University of Alabama

Sherman D. Hanna

Ohio State University (OSU)

Samual Chen

Sun Trust Banks

Date Written: March 18, 2014

Abstract

Previous retirement adequacy studies have ignored expected retirement income stages. Ignoring retirement income stages results in biased estimations of retirement adequacy. This study analyzes retirement income stage theoretically and then empirically. Based on the 1995 to 2007 Survey of Consumer Finances (SCF) datasets, about 73% of working households with the head and/or spouse/partner age 35-70 and working full-time will have more than one retirement income stage. When income stages are taken into account, the proportion of households with retirement adequacy ranges from 44% in 1995 to 58% in 2007. Ignoring retirement income stages results in adequacy proportions being 23 to 28 percentage points higher. Financial planners and researchers evaluating retirement adequacy should take retirement income stages into account.

Keywords: retirement adequacy, personal finance, labor force

JEL Classification: D14, D91, J14

Suggested Citation

Kim, Kyoung Tae and Hanna, Sherman D. and Chen, Samual, Consideration of Retirement Income Stages in Planning for Retirement (March 18, 2014). Journal of Personal Finance, 13(1), 52-64, 2014. Available at SSRN: https://ssrn.com/abstract=2411192

Kyoung Tae Kim

University of Alabama ( email )

312 Adams Hall
Tuscaloosa, AL 35487-0001
United States

Sherman D. Hanna (Contact Author)

Ohio State University (OSU) ( email )

1787 Neil Avenue
Campbell 265D
Columbus, OH 43210
United States
614-292-4584 (Phone)

Samual Chen

Sun Trust Banks ( email )

Richmond, VA
United States

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