The Adequacy of Household Saving

Engen, Eric M.; Gale, William G.; Uccello, Cori E.

doi:10.2307/2534679

Cited by 213 publications

(175 citation statements)

References 68 publications

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“…They have different ex post outcomes because they experience different realizations of the stochastic processes for earnings, layoffs, asset returns, and so forth. In this respect, the model resembles those of Engen, Gale, and Uccello (1999) and Scholz, Seshadri, and Khitatrakun (2004). These papers find that most American households are saving at least as much as the "optimal" amount implied by their calibrated life cycle models, given the actual earnings histories and Social Security and pension entitlements of the households in their samples.…”

Section: The Drop In Consumption At Retirementmentioning

confidence: 92%

“…Alternative "behavioral" models of saving, in which consumers have limited ability or willingness to plan for the future or to carry out their plans, imply that a laissez-faire approach to saving policy is likely to be inefficient (Ameriks et al, 2003;Bernheim 1994;Laibson et al, 1998;Poterba, Venti, and Wise, 1996;Thaler and Benartzi, 2004). Others argue that the evidence is consistent with adequate retirement savings, and that policies intended to encourage greater savings are likely to be ineffective and costly (Lazear, 1994;Engen, Gale, and Uccello, 1999;Engen, Gale, and Scholz, 1996). This is clearly a major public policy issue in view of the rapid aging of the population.…”

Section: Introductionmentioning

confidence: 99%

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Retirement and Consumption in a Life Cycle Model

Blau

2008

Journal of Labor Economics

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Consumption expenditure declines sharply at the time of retirement for many households, but the majority maintain a smooth consumption path. A simple life cycle model with uncertainty about the time of retirement can account for this pattern. A richer version of the model is calibrated to data from the Health and Retirement Study (HRS). The median change in consumption expenditure at retirement generated by the model is zero, while the mean is negative, matching the HRS data. However, the magnitude of the drop in consumption among households that experience a decline is too small in the model compared to the data.

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Section: The Drop In Consumption At Retirementmentioning

confidence: 92%

Section: Introductionmentioning

confidence: 99%

Retirement and Consumption in a Life Cycle Model

Blau

2008

Journal of Labor Economics

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“…I have argued here that the modern version of the dynamically optimizing consumption model is able to match many of the important features of the empirical data on 18 See Huggett (1996), Dynan Skinner andZeldes (1996), Quadrini and Ríos-Rull (1997), Engen, Gale, andUccello (1999), andCarroll (2000c) for several perspectives on this question. For general equilibrium macro models which attempt to match both micro and macro data using mixed population of patient and impatient consumers, see Krusell andSmith (1998) andCarroll (2000b).…”

Section: Limitationsmentioning

confidence: 97%

A Theory of the Consumption Function, With and Without Liquidity Constraints (Expanded Version)

Carroll¹

2001

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“…This means that consumption needs are expected to decline during retirement over time, but in a somewhat arbitrary fashion. Third, real consumption may decline if the marginal utility of consumption is held constant and uncertainty about income and life expectancy are introduced (Engen, Gale, and Uccello 1999). As households must consider an uncertain future, their marginal utility of certain consumption today is higher than the marginal utility of uncertain consumption in the future.…”

Section: Retirement Income Adequacymentioning

confidence: 99%

The Adequacy of Retirement Resources among the Soon-to-Retire, 1983–2001

Wolff¹

2007

Government Spending on the Elderly

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A central issue confronting soon-to-retire workers (i.e., those aged 47-64) is whether they will have command over enough resources (both private and public) to maintain a decent standard of living in retirement. Typically, the adequacy of projected retirement income is judged in relation to some absolute standard (e.g., poverty threshold) and preretirement income ("replacement rate"). Using data from the Federal Reserve Board's Survey of Consumer Finances for 1983, 1989, and 2001, I find that expected retirement income grew robustly from 1989 to 2001 (by 38 percent in real terms) and the share with expected retirement income less than twice the poverty line fell by 5 percentage points. The percentage-point decline was even greater for minority households (11.6) and single females (5.7). The change in the share with replacement rates over 50 percent was 4.5 percentage points, though in this case much lower for minorities (0.9 percentage points) and single females (1.8 percentage points). However, percentage point changes for minorities and single females were much smaller, at 75 percent and a 100 percent replacement rates, respectively. Moreover, retirement wealth is very unevenly distributed. Whites and married couples had substantially larger wealth accumulations than their respective counterparts.JEL Classifications: J32, D31, H55

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The Adequacy of Household Saving

Cited by 213 publications

References 68 publications

Retirement and Consumption in a Life Cycle Model

Retirement and Consumption in a Life Cycle Model

A Theory of the Consumption Function, With and Without Liquidity Constraints (Expanded Version)

The Adequacy of Retirement Resources among the Soon-to-Retire, 1983–2001

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