View Research by Author - Desmond Toohey

Citation URL: http://www.urban.org/DesmondToohey

Americans save for retirement by building wealth in personal accounts, home equity, pension plans, retirement accounts and Social Security. We use data from the Survey of Consumer Finances (SCF) and methods to estimate the wealth values of Social Security and pension plans to show how wealth builds over the life cycle. We find that the typical household accrues wealth throughout the life cycle. Households in the bottom income quintile, those that did not complete high school and minorities accumulate much less wealth than their counterparts, and Social Security accounts for a large share of their preretirement wealth.

This study uses the Urban Institute's DYNASIM model to project wealth and income at retirement for low-income boomers. The findings suggest that most with low lifetime earnings will also have low incomes at older ages unless they either continue working or move in with others who help support them financially. Saving more, working more consistently over their lifetime, and delaying retirement is projected to improve outcomes for low-earning boomers, but none of these actions will increase retirement living standards dramatically.

One way to achieve an ownership society is to endow all children with savings accounts starting at birth. This report shows that specific design features of a children's savings account program will impact the distribution of wealth. For example, non-taxability of account earnings distributes significantly more benefits to higher-income groups than to lower-income groups. Also, because many families experience mobility over their lifetimes, a significant portion of benefits conditioned on low annual income will accrue to middle- and higher-income families. Regardless, these accounts could be important in getting children banked and teaching them the value of saving and compound interest.

Older men who expect high health care costs for themselves or their spouses after age 65 retire about 13 months later than those who expect low costs. The difference for women is 12 months. For those receiving health insurance from their employers, continued work reduces the risk of high out-of-pocket health care costs. Working longer also increases retirement incomes, making health care costs more affordable.

Rising health care costs threaten financial security at older ages and lead many older Americans to delay retirement. Continued work reduces the risk of high out-of-pocket health care costs for workers receiving health benefits from their employers. Working longer also increases retirement incomes, making health care costs more affordable. This report shows that men with very high expected health care costs after age 65 retire 11 months later than those with very low health care costs. For women, the difference is 12 months.

The demand for long-term care services will surge in coming decades when the baby boomers reach their 80s. Declining family sizes, increasing childlessness, and rising divorce rates will limit the number of family caregivers. Rising female employment rates may further reduce the availability of family care, increasing the future need for paid home care. This study projects to 2040 the number of people ages 65 and older with disabilities and their use of long-term care services. The simulations show that even under the most optimistic scenario long-term care burdens on families and institutions will increase substantially.

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