Do Newly Retired Workers in the United States Have Sufficient Resources to Maintain Well-Being?

16 Pages Posted: 5 Jun 2006

See all articles by Robert Haveman

Robert Haveman

University of Wisconsin - Madison - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute)

Karen Holden

University of Wisconsin - Madison - School of Human Ecology

Barbara Wolfe

University of Wisconsin-Madison; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); RSSS-economics; National Bureau of Economic Research (NBER)

Shane M. Sherlund

Federal Reserve Board of Governors

Abstract

A current policy issue is the extent to which savings are sufficient to sustain economic well-being in retirement. We compare annuitized wealth at retirement to three preretirement consumption estimates. About one-half of new retirees have insufficient resources to enable the full maintenance of estimated preretirement consumption in retirement, and about 40% fail to meet the 0.7 of earnings standard that is used in many studies. Using standards reflecting social (poverty) norms we find a less serious problem. About 5% (25%) of new retirees have insufficient resources to enable an above-poverty (near-poverty) level of living during retirement.

Suggested Citation

Haveman, Robert H. and Holden, Karen Anderson and Wolfe, Barbara L. and Sherlund, Shane M., Do Newly Retired Workers in the United States Have Sufficient Resources to Maintain Well-Being?. Economic Inquiry, Vol. 44, No. 2, pp. 249-264, April 2006. Available at SSRN: https://ssrn.com/abstract=906385

Robert H. Haveman (Contact Author)

University of Wisconsin - Madison - Department of Economics ( email )

1180 Observatory Drive
Madison, WI 53706
United States
608-263-7398 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Karen Anderson Holden

University of Wisconsin - Madison - School of Human Ecology ( email )

1225 Observatory Drive
Madison, WI 53706
United States
608-263-9283 (Phone)

Barbara L. Wolfe

University of Wisconsin-Madison ( email )

Social Science Bldg
Madison, WI 53706
United States
6082626358 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

RSSS-economics ( email )

Canberra, Australian Capital Territory 2601
Australia

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Shane M. Sherlund

Federal Reserve Board of Governors ( email )

20th and C Streets, NW
Mailstop 93
Washington, DC 20551
United States
202-452-3589 (Phone)
202-728-5887 (Fax)

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