Saving for Retirement
By Arnold Kling
We find that over 80 percent of HRS households [a sample of households aged 51-62 in 1992] have accumulated more wealth than their optimal targets. These targets indicate the amounts of private saving households should have acquired at the time we observe them in the data, given their life cycle planning problem and social security and defined-benefit pension expectations and realizations. For those not meeting their targets, the magnitudes of the deficits are typically small.
This sounds like wonderful news, for it suggests that Americans are saving plenty for their retirements. But the median net worth in the data is $102,600, which does not impress me. The median “optimal” net worth as calculated by the authors is $63,116, which impresses me even less.
Maybe there is a good case to be made that $63,116 is plenty of savings for the median household in their fifties. But for now, I am inclined to treat this as another case in which the prose has gotten ahead of the data.
Thanks to Tyler Cowen for the pointer.