assessing the financial status of households at various future dates. It also presents a brief overview of the financial status of households currently reaching retirement age in the United States, including the assets these households own and the typical level of such holdings. The subsequent section discusses three prominent models of saving behavior, the life-cycle model, the ''precautionary saving" model, and the bequest model, and examines the degree to which each model appears to be supported by available data. It also considers the central implications of each model for predicting future financial status.

The next three sections are concerned with the effect of various policies on personal saving behavior. The third section discusses the interaction between Social Security and private saving, reporting on time series as well as cross-sectional studies of the Social Security offset. The fourth section presents a parallel discussion focusing on private pensions and other personal saving. The fifth section explores the recent increase in the popularity of targeted retirement saving vehicles, such as Individual Retirement Accounts (IRAs) and 401(k) plans, and how they are likely to affect the future financial status of the elderly.

The sixth section examines one form of wealth accumulation that is particularly widespread: housing wealth accumulation. It considers patterns of home equity accumulation, the role of housing wealth in financing retirement income needs, and the existing body of research on housing decisions of elderly households. A brief concluding section outlines a number of unresolved research questions. It also describes how some of these questions may be addressed using available data sets and notes why others may be difficult to resolve even with additional data.

FORECASTING FINANCIAL STATUS: AN ORGANIZING FRAMEWORK

If the average wealth in 1994 of individuals born in year a is Wa, 1994, then the average wealth of individuals in this cohort in year t > 1994 can be forecast by

where Sa,k is the forecast net saving in a year k by those born in year a,k > 1994, and r is the projected annual after-tax rate of return on savings. Because cohort averages conceal important differences in the wealth positions of households in a given cohort, and because retirement income policy is often concerned with the financial status of the least well-off groups in the population, a forecasting equation similar to the one above can be applied separately to different segments of a given cohort. Bernheim and Scholz (1993) follow such a strategy in separately forecasting wealth at retirement for those with college degrees, some college, and only high school education. Hurd (1992) describes a number of the more sophisticated microsimulation models that have been used to forecast retirement in-



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