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Are You Sure You're Saving Enough for Retirement?

Jonathan S. Skinner

Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)

March 2007

NBER Working Paper No. w12981

Many observers believe current aging baby boomers are woefully unprepared for retirement. Others raise the prospect that Americans are saving too much for retirement. This paper attempts to reconcile these contrasting views using a simple life cycle model and a more sophisticated retirement program, ESPlanner, with special reference to retirement prospects for economists. I find most households with post-graduate degrees fall short of the wealth needed to smooth spending through retirement. Of course, there are ways to economize during retirement: stepping up household production (cooking at home rather than eating out), selling one's house, or maintaining the modest individual consumption levels from when children still roamed the house. But ultimately, I argue these laudable strategies to reduce retirement expenses will be dwarfed by rapidly growing out-of-pocket medical expenses. The combination of eroding retiree health benefits and the risk of catastrophic future out-of-pocket health spending suggests that even conventional retirement planning recommendations could be too low.

Number of Pages in PDF File: 37

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Date posted: March 23, 2007  

Suggested Citation

Skinner, Jonathan S., Are You Sure You're Saving Enough for Retirement? (March 2007). NBER Working Paper No. w12981. Available at SSRN: https://ssrn.com/abstract=975922

Contact Information

Jonathan S. Skinner (Contact Author)
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
603-646-2535 (Phone)
Dartmouth College - Department of Economics ( email )
Hanover, NH 03755
United States
603-646-2535 (Phone)
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