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Why Americans don't face a retirement crisis

Author

Listed:
  • Andrew G. Biggs

    (American Enterprise Institute)

  • Sylvester J. Schieber

Abstract

There is no question that many Americans face challenges in preparing for retirement. Social Security is substantially underfunded, its long-term shortfalls are increasing, and policymakers have not made reform a priority. Nonetheless, analysts' claims that Americans face a "retirement crisis" overstate what households will need in retirement, fail to account for how the presence of children in a household affects the need to save, and incorrectly point to households' declining wealth-to-income ratios as a sign of deteriorating retirement saving. A careful review of data and retirement studies reveals that the state of retirement preparedness is in fact a more modest, manageable issue. A false sense of crisis risks enacting policies that could have significant costs for government budgets and ordinary Americans' retirement security. In particular, government-run pension programs are the most poorly funded element of overall retirement saving. Policies that would make Americans more dependent on these programs could put their retirement income security at risk.

Suggested Citation

  • Andrew G. Biggs & Sylvester J. Schieber, 2015. "Why Americans don't face a retirement crisis," AEI Economic Perspectives, American Enterprise Institute, March.
    • Handle: RePEc:aei:journl:y:2015:id:836449
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    References listed on IDEAS

    as
    1. Norma B. Coe & Anthony Webb, 2010. "Children and Household Utility: Evidence from Kids Flying the Coop," Working Papers, Center for Retirement Research at Boston College wp2010-15, Center for Retirement Research, revised Nov 2010.
    2. Alicia H. Munnell & Wenliang Hou & Anthony Webb, 2014. "NRRI Update Shows Half Still Falling Short," Issues in Brief ib2014-20, Center for Retirement Research.
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    Cited by:

    1. John Chalmers & Olivia S. Mitchell & Jonathan Reuter & Mingli Zhong, 2021. "Auto-Enrollment Retirement Plans in OregonSaves," Working Papers wp425, University of Michigan, Michigan Retirement Research Center.
    2. John Chalmers & Olivia S. Mitchell & Jonathan Reuter & Mingli Zhong, 2021. "Auto-Enrollment Retirement Plans for the People: Choices and Outcomes in OregonSaves," NBER Working Papers 28469, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Retirement; AEI Economic Perspectives;

    JEL classification:

    • A - General Economics and Teaching

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