Are we under-saving for retirement?
Of course, there are serious social problems here. One is that most of the poor don’t save. The poorest quarter of the elderly rely on Social Security for 85 percent of their income, notes economist James Poterba of the Massachusetts Institute of Technology. Another problem: People don’t know when they’ll die. It’s difficult to plan. People who live longer than expected or who spend extended stretches in a nursing home can exhaust sizable savings. Without nursing-home costs, about 90 percent of baby-boom retirees will have adequate incomes, estimates Jack VanDerhei of the Employee Benefit Research Institute. With nursing homes, that drops to about 80 percent.