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

Yoonkyung Yuh ()
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Yoonkyung Yuh: Ewha School of Business, Ewha Womans University, Ewha Shinsegae Building RM425, 11-1 Daehyun-dong, Seodaemun-gu, Seoul 120-750, Republic of Korea (ROK).

The Geneva Papers on Risk and Insurance - Issues and Practice, 2011, vol. 36, issue 2, 304-323

Abstract: 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.

Date: 2011
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