Are You Sure You're Saving Enough for Retirement?

37 Pages Posted: 23 Mar 2007 Last revised: 22 Dec 2022

See all articles by Jonathan S. Skinner

Jonathan S. Skinner

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

Date Written: March 2007


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.

Suggested Citation

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

Jonathan S. Skinner (Contact Author)

Dartmouth College - Department of Economics ( email )

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National Bureau of Economic Research (NBER) ( email )

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