Monday, October 24, 2016

New paper: “The Role of Social Security in Overall Retirement Resources: A Distributional Perspective”

The Role of Social Security in Overall Retirement Resources: A Distributional Perspective
by Sebastian Devlin-Foltz, Alice Henriques, and John Sabelhaus.

Median retirement wealth in the bottom 50 is substantially lower than in the top 50. However, when one accounts for Social Security, the differences in total retirement wealth across the distribution are much less severe. To think about retirement readiness, we examine the ratio of retirement assets to usual income (final two columns). The main takeaway message on retirement readiness is that Social Security goes a long way towards explaining why differences in DB and DC retirement wealth do not translate into dramatic shocks to living standards across the income distribution as a given cohort crosses over into retirement. Median total retirement wealth (including Social Security) is much lower for the bottom half of the usual income distribution, but relative to median income, it is roughly the same as for the next 45 percent income group, and more than double the same ratio for the top 5 percent.

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Click here to read the whole paper.

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