description- – This paper estimates how much people actually receive in retirement relative to earnings before retirement when all sources of income, including income generated by homeownership, are combined. Previous studies find that middle class people need between 70 and 75 percent of their pre-retirement earnings to maintain their life style once they stop working. The objective of this study is to determine what people are actually receiving in retirement.Regardless of how retirement income and pre-retirement income are defined, households with pensions appear to meet the threshold of adequacy. Those without pensions do not fare as well, and some must be really struggling. Taking into account a comprehensive measure of income both before and after retirement - including housing - produces replacement rates for those with pensions of 79 percent for couples and 89 percent for single person households. Those without pensions have replacement rates of 62 percent for couples and 63 percent for singles. These replacement rates drop about 15 percentage points, however, when recent earnings (the highest five years of the last ten) are used as the benchmark. The overall the picture is good.But today is in some sense the"golden age"of retirement income. Today's retirees are claiming Social Security benefits before the extension in the retirement age to 66 and then 67, which is equivalent to an across-the-board cut in benefits. Today's retirees also do not face the huge deductions in their Social Security check to cover Medicare premiums for Part B and Part D that tomorrow's retirees will. And today, the average retiree does not pay personal income tax on his Social Security benefits, whereas future retirees will increasingly see a portion of their benefits subject to taxation. Finally, most of today's retirees are covered primarily by a defined benefit plan and do not face the uncertainty associated with the inadequate lump-sum payments from 401(k) plans. The comfortable circumstances of today's retirees make it very hard to call attention to the challenges that future retirees will face.
subjectcollectiondatepublishercreatorformat description- – Do"family traditions"influence bequest behavior? If an individual receives an inheritance from his parents, is he more likely to give a bequest to his children, even after controlling the boost in wealth conferred by the inheritance? Family traditions are pertinent to a host of issues connected with intergenerational transfers: Ricardian equivalence and crowding out, the role of bequests in wealth accumulation, and the responsiveness of bequests to tax changes. Traditions also matter for issues related to behavioral economics, such as mental accounts, social learning and intergenerational transmission of values. Yet because of data limitations few studies to date have analyzed both bequests and inheritances; most focus on one or the other individually. We use the Health and Retirement Survey (HRS), one of the few data sets with comprehensive information on both bequests and inheritances. We find that the receipt of inheritances and intended bequests are positively and significantly related (both in the economic and the statistical sense) even after controlling for a host of other household characteristics, most importantly, household net worth. Discerning the correct label to attach to this partial correlation is a more daunting task. We provide a precise definition of what we mean by a"family tradition"and how it might differ from other channels of influence. Our examination of the nuances of traditions hinges on measuring the flexibility of bequest plans when wealth or other circumstances change. (For instance, will a wealth shortfall have a smaller impact of an inheritor, who may be attempting to carry on a family tradition?) We find some evidence to support the idea that the propensity to bequeath out of wealth differs depending upon whether current wealth is large or small relative to inheritances received. We conclude that economists interested in intergenerational transfers should pay more attention to the possibility of family traditions in bequest behavior.
subjectcollectiondatepublishercreatorformat
