How Much Saving Does It Take for Vulnerable Populations to Maintain Subjective Economic Well-being Throughout Retirement in the United States?

Julian Schmied , Max Planck Institute for Demographic Research

Previous research suggests that the average U.S. American retiree has saved adequately for retirement. Beyond the average though, many retirees experience a downgrade in the living standard, which is sometimes unexpected, most times unplanned, but almost always unwanted. This paper sheds further light on the question how saving adequacy can be empirically quantified and what socio-economic aspects matter for saving adequacy. Identification builds on the question how much the retirement income, relative to the working income, has to be to maintain the level of subjective economic well-being from working life. The answer to this question is decomposed across vulnerable groups. For example, examining the Health and Retirement Study, I find that healthy retirees need about 77 percent of their end-of-career working income, wheres those reporting poor health need 83 percent. The final paper takes further vulnerable groups into account and formulates alternative old-age saving goals.

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 Presented in Session 6. Health & Mortality & Aging