Assessing Adequacy of Retirement Income for U.S. Households: A Replacement Ratio Approach

The retirement income replacement ratio is projected using the Federal Reserve's Survey of Consumer Finances. On the basis of lognormal portfolio projections and current portfolio allocation, at least 44 per cent of pre-retired households will not be able to maintain 70 per cent of permanent in...

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Bibliographic Details
Published inGeneva papers on risk and insurance. Issues and practice Vol. 36; no. 2; pp. 304 - 323
Main Author Yuh, Yoonkyung
Format Journal Article
LanguageEnglish
Published London Palgrave Macmillan 01.04.2011
Palgrave Macmillan UK
SeriesThe Geneva Papers on Risk and Insurance - Issues and Practice
Subjects
Age
Baby boomers
Earnings
Economics and Finance
Family income
Finance
Forecasting techniques
Households
Income estimates
Insurance
Investment return rates
Original Article
Portfolio investments
Ratios
Retirement
Retirement age
Retirement benefits
Retirement income
Retirement planning
Retirement plans
Risk Management
Savings
Social security
Social Security benefits
Studies
Wealth
United States > US
replacement ratio
retirement planning
retirement income adequacy
lognormal forecasting model
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Summary:The retirement income replacement ratio is projected using the Federal Reserve's Survey of Consumer Finances. On the basis of lognormal portfolio projections and current portfolio allocation, at least 44 per cent of pre-retired households will not be able to maintain 70 per cent of permanent income standard in retirement. Households planning to retire later and taking a high financial risk in savings and investments have a higher projected replacement ratio. Households having a high proportion of non-housing assets held in equity or bonds have a higher projected replacement ratio than those having a high proportion in cash equivalents.
ISSN:1018-5895
1468-0440
DOI:10.1057/gpp.2011.7