Economic Quarterly

John Weinberg and Doug Campbell examine the extent to which Americans are financially prepared for retirement. Careful studies on American saving habits show that most families nearing retirement are saving both adequately and optimally---or the best they can given their lifetime expected incomes. However, estimates about savings adequacy depend on the assumption that entitlement program benefits will be forthcoming. Population aging and the retirement of baby boomers challenge that assumption and may portend a future in which some people will need to consume less than they would otherwise.