Wharton Pension Research Council Working Papers

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Working Paper

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Low returns on financial assets and increasing longevity mean saving for retirement is becoming more challenging than it has been in the past. Generations retiring in the near term (boomers) face increased longevity, but have lived through periods with strong market returns boosting their assets, and many also have DB entitlements. Younger generations also face increasing longevity, and in addition are likely to earn much lower investment returns on their retirement assets and few have DB. The challenge for them is tougher. We model the likely outcomes for different cohorts under scenarios for savings behavior, investment returns and life expectancy. We take account of likely pillar one entitlements and varying replacement rate requirements and expected longevity in different demographic and income groups. We show that younger generations do face substantial challenges, but there are plausible courses of action involving increased contributions and delayed or partial retirement that can provide reasonable income replacement rates in retirement. We map out the steps that the retirement industry (government, employers, financial services providers) needs to take to support people in following these courses of action, such as providing more flexibility over social security.


The published version of this Working Paper may be found in the 2018 publication: How Persistent Low Returns Will Shape Saving and Retirement.

Working Paper Number


Copyright/Permission Statement

All findings, interpretations, and conclusions of this paper represent the views of the author(s) and not those of the Wharton School or the Pension Research Council. © 2017 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.

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Economics Commons



Date Posted: 13 February 2019