Are Retirees Falling Short? Reconciling the Conflicting Evidence

Alicia H. Munnell, Matthew S. Rutledge, and Anthony Webb

Abstract — A fundamental question in the retirement area is whether people will have adequate retirement income to maintain their pre-retirement standard of living. Existing studies offer conflicting assessments; some indicate a serious problem while others present an optimistic view. This chapter attempts to explain why the assessments differ. We find that the optimistic views of retirement preparedness depend crucially on behavioral assumptions that may not reflect real world activity or on consumption levels that are unsustainable in the long run. Thus, our best assessment is that retirees are falling short and will fall increasingly short over time.