encourage more early retirement. On the other hand, it is possible that some potential workers currently remain out of the labor force in order to be eligible for Medicaid or Medicare (through the Social Security disability program). The increased affordability and availability of health insurance under the ACA could raise the labor force participation of these workers. Understanding the magnitude of each of these effects will contribute importantly to our ability to gauge the likely macroeconomic effects of demographic change and to evaluate the likely impacts of various policy reforms.


3a. Rethink how consumption “needs” change at retirement and how they evolve over the course of the retirement period. One of the most difficult challenges in evaluating the findings on retirement resource adequacy is deciding what the benchmark should be for postretirement consumption. Is an 80 percent replacement rate of income sufficient? Is there a substantial opportunity to substitute home production for market purchases, and do job-related costs represent a substantial share of preretirement consumption spending? How do these factors vary with age and duration of retirements that may last 30 years or more? There have been some studies directed at these issues, but further refinement would contribute to a better understanding of saving adequacy for future cohorts of retirees.

3b. Elucidate the interactions between private saving and government policy. The macroeconomic effects of policy changes depend on how individuals respond to them. In particular, How would households respond to reductions in Social Security or Medicare benefits? A wide empirical literature exists on how the retirement decision is affected by the eligibility age for public pensions, but much less is known about saving behavior and retirement age, or saving behavior and Medicare generosity. Of particular interest, given the likelihood that it will occur, would be the effect on private saving decisions of increased means-testing of benefits.

3c. Evaluate how sensitive retirement preparedness results are to scenarios for financial market returns and changes in health care cost growth. If house prices remain flat in real terms for 10 years, for instance, how would this affect retirement readiness results in 2025? What about a low real return on equities for a decade—a repeat of the 2000–2012 experience, for example? This should be a relatively straightforward set of calculations using extant data from national surveys (e.g., the Health and Retirement Study and the Survey of Consumer Finances) in tandem with projections of asset market movements.

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