Are All Americans Saving ‘Optimally’ for Retirement

The findings and conclusions expressed are solely those of the authors and do not represent the views of SSA, any agency of the Federal Government or the RRC. We are grateful to our colleague Surachai Khitatrakun for very helpful advice, Jeff Kling for his help in acquiring the restricted HRS data, to the National Institute of Aging and the Social Security Administration for financial support, and to the professionals at the University of Michigan, RAND and the Federal Reserve Board of Governors who developed the HRS and SCF data that we rely on. There is widespread concern expressed in newspapers, and in public policy and academic studies that a substantial fraction of Americans are preparing poorly for retirement. The headlines of newspaper articles – two recent examples are “Debt-Squeezed Gen X Saves Little ” or “Retirement’s Unraveling Safety Net ” – suggest that individuals or the institutions that people rely on for retirement security are falling short.1 Journalists likely take cues from the financial services industry and from writing by academics and other opinion leaders. An article in the 2007 McKinsey Quarterly (Court, Farrell, and Forsyth, 2007) states “One finding of our research was a segmentatio