Tag: optimal saving
Much of the disagreement over whether the United States faces a retirement savings crisis hinges on different assumptions on how household consumption changes once the kids leave home. “Optimal savings” studies, which assume that household consumption declines and savings increase when the kids leave, suggest that most people are saving optimally. On the other hand,…
Abstract The expectation of needing long-term care is an essential input into optimal saving and long-term care insurance decisions. Previous optimization models have used the Robinson (2002) transition probabilities, which have not been systematically updated and which underpredict the use of care while overpredicting the average stay of people who enter care. We develop a…
