Talking Retirement

More About Saving Too Much for Retirement

Today I read an interesting follow-up to the New York Times article from last week that talked about how much disagreement there is about how American’s are doing with saving for retirement (Click here to read the earlier post on TR.) The follow-up article, Retirement savings may not be all that bad, is from the Wharton school of Business. It outlines the problem.

No one can know for sure how people will fare in the future. That will depend on people’s lifespans, investment returns, inflation, the cost of housing and medical care and many other unknowns. But people have to plan as best they can despite the uncertainties.

The article then goes on to talk about the problem of saving too much.

Kotlikoff argues that if a typical household of modest means overestimates its cost of living in retirement by 10 percent, it will have to save so much that its current annual expenditures would have to be reduced by 30 percent.

There seems to be some overlap of information from the New York Times article, but it’s still worth the read. Read the article here.