NB19-06

Changes Across Birth Cohorts in Income Adequacy from Pre-Retirement to Death: Evidence from IRS Tax Data
Investigators: John Beshears (Harvard and NBER), James J. Choi (Yale and NBER), David Laibson (Harvard and NBER), Brigitte C. Madrian (Harvard and NBER)

Concerns that Americans are not saving enough for retirement, and that this
problem is getting worse over time, are common. For example, Munnell, Hou, and
Sanzenbacher (2018) estimate that the fraction of working-age American households
that will have inadequate income in retirement to maintain their pre-retirement standard
of living has grown from 31% in 1983 to 40% in 1998 to 50% in 2016. The alleged
decline in economic security in retirement has been attributed to declines in the
personal savings rate, the prevalence of defined benefit pensions, and the real interest
rate. On the other hand, Biggs (2019) argues that there is no retirement savings crisis.
Among other things, he points out that over time, the over-65 poverty rate has fallen and
median income in retirement has risen.
In this project, we examine trends in retirement income across the 1930-1941 birth
cohorts using a 5% random sample from IRS tax data, comprising 22.6 million personyears.
An advantage of our analysis is that we do not rely upon survey reports of
income, whose accuracy has been a subject of concern (e.g., Bee and Mitchell, 2017;
Chen, Munnell, and Sanzenbacher, 2018).

Social Security (OASI and DI)
Measuring sources of income and adequacy
Retirement
Financial security

Papers funded by this Project: