WOB#4  

Introduction

Today, the average retirement age is 63. If people continue to retire at 63, they are going to face a severe decline in living standards at retirement for a number of reasons. First, at any given retirement age, Social Security benefits will replace less of pre-retirement earnings as the Normal Retirement Age rises from 65 to 67. Second, Medicare premiums, which are deducted before the Social Security check goes in the mail, are slated to rise dramatically. Third, taxes on Social Security benefits will also rise. In addition, pension coverage in the private sector has shifted from defined benefit plans, where workers receive a life annuity based on years of service and final salary, to 401(k) plans, where individuals are responsible for their own saving and the median balance for individuals approaching retirement is only $60,000...

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The authors are all with the Center for Retirement Research at Boston College (CRR). Alicia H. Munnell is the Director of the CRR and the Peter F. Drucker Professor of Management Sciences at Boston College’s Carroll School of Management. Marric Buessing is a research associate. Mauricio Soto is a senior research associate at the CRR and an Economics graduate student at Boston College. Steven Sass is the Associate Director for External Relations at the CRR.