 Is the Brazilian saving enough to retire?Ricardo Brito () and
Paulo T. P. Minari ()
Brazilian Review of Finance, 2015, vol. 13, issue 1, 1-39 Abstract: This article answers the question: how much wealth should a Brazilian accumulate along time to sustain his (her) consumption during retirement? Using a life-cycle model, we simulate scenarios for different household incomes, family size, and life circumstances, to obtain the additional saving effort needed by future beneficiaries of the Regime Geral de Previdência Social (RGPS). Given the current high replacement rates, we show that more than 95% of the population needs no additional savings during their working age, because they will enjoy an increase in their “free” per capita income during retirement. In other words, surprisingly, a low voluntary saving rate is the right decision from the perspective of an average Brazilian that plans a smooth consumption, in the belief that current social security arrangements will persist. Were it not for the very high banking spread, it would be optimal for the average Brazilian to borrow in the working age to increase his (her) consumption level. Keywords: Life-Cycle Theory; Savings; Social Security (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:brf:journl:v:13:y:2015:i:1:p:1-39 Access Statistics for this article Brazilian Review of Finance is currently edited by Marcio Laurini More articles in Brazilian Review of Finance from Brazilian Society of Finance |
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