Forecasting Retirement Needs and Retirement Wealth

Rating:
Summary: Thinking about Retirement? Read This First!
Review: "Forecasting Retirement Needs and Retirement Wealth" is a collection of research papers using the first (1992) wave of the biennial Health and Retirement Study (HRS) to paint a picture of the financial health of the soon to be retiring pre-baby-boom generation. Each of these papers focussed on a different specific issue affecting those approaching retirement. Like a cookbook, where a few good recipes can be worth the purchase of the entire book, I found several chapters to be incredibly valuable, whereas other chapters have yet to arouse my interest.

One of the three chapters that I gained the most from was Chapter 2, "How Prepared Are Americans for Retirement?," which summarized several studies that attempted to gauge how well current and projected savings of near-retirees will meet their expected expenses and then used a software package to determine how well the subjects in the HRS study will fare.

A second study found in Chapter 3, "Projected Retirement Wealth and Saving Adequacy," broke down HRS subjects' wealth by mean, median, and deciles, as well as the proportion of housing wealth, financial wealth, social security wealth, and pension wealth held by each of these groupings. This chapter then went on to identify prescribed saving and replacement rates for each of these populations.

The last study I found very valuable was Chapter 5, "Explaining Retirement Saving Shortfalls." This section examined the wealth discrepancies between various HRS populations according characteristics such as marital status, race, education, health, and attitudes, and then attempted to explain the likelihood and extent of any shortfalls in their wealth accumulation. Later chapters would explore some of these demographic issues further: Chapter 6 looks at issues affecting "Women on the Verge of Retirement," while Chapter 7 looks at "Prospects for Widow Poverty." Chapter 8 further explores issues facing minorities at retirement. I expect that some of the chapters I have not mentioned will increase in value to me as time passes.

This book is written for a college level audience with various sections occasionally requiring re-reading to grasp the full implications of what is said. While most of the tables and graphs were self-explanatory, because it has been more has a decade since my last statistics class, I would have benefited from a better explanation of data such as that found in Tables 3, 4 and 5, in Chapter 5. Overall however, I have found this book very informative as I prepare for my own retirement. Since purchasing this book a year and a half ago, I have not hesitated to recommend it to others. I look forward to the issuance of studies utilizing subsequent waves of the HRS data.