How Much Should People Save?

Source: Alicia H. Munnell, Anthony Webb and Wenliang Hou, Issue Brief, Center for Retirement Research at Boston College, IB#14-11, July 2014

The brief’s key findings are:
∙ The National Retirement Risk Index framework is used to address how much working-age households need to save for retirement.
∙ A typical household should get a third of its retirement income from a savings plan, with the low income needing one quarter and the high income one half.
∙ A typical household needs to save about 15 percent of earnings, with the low income requiring less and the high income more.
∙ For those with a savings shortfall, the necessary savings hike is much more feasible for younger households than for older households.
∙ Starting to save early and retiring late dramatically reduce a household’s required saving rate.