Estimation of retirement adequacy targets for one- and two-adult households from official South African data

["Pensions", "Social security", "Wealth", "Retirement"]

Butler, Megan

University of the Witwatersrand

Others  :  http://wiredspace.wits.ac.za/bitstream/10539/11339/3/MBJ%20Butler%20-%20Retirement%20Adequacy%20Targets%20-%20%20Oct%202011.pdf

瑞士|英语

来源: University of the Witwatersrand

【 摘 要 】

Retirement adequacy targets provide an indication as to how much wealth is needed at retirementto provide for an adequate retirement income. These targets have design and strategyimplications for social security systems and retirement funds and can be used by individuals toassess their preparedness for retirement. The primary aim of this research was to estimateretirement adequacy targets for one- and two-adult households from Statistics South Africa’sIncome and Expenditure Survey 2005/2006. Retirement adequacy targets were expressed aswealth-earnings ratios, defined as the multiple of salary at retirement required for a comfortablyadequate retirement. The targets would be sufficient to provide for the higher of the preretirementlifestyle or subsistence living. An important subsidiary aim was to examineconsumption behaviour at and in retirement. Non-healthcare consumption was not found tochange at retirement if income levels remained at pre-retirement levels. For certain households,healthcare expenditure may increase on retirement and may be funded from the contributions toretirement savings that are no longer required in retirement. The retirement adequacy targetsdecreased with retirement age but there was not a clear relationship between retirement savingsrates and the targets. Retirement adequacy targets decreased with income but were complexfunctions of household composition, sex of the head of the household, type of settlement, age,home ownership and the retirement savings rate. Where household members retired at differenttimes, the earnings of the younger person during the semi-retirement phase reduced the targetssubstantially. The retirement adequacy targets estimated implied that the replacement ratiotargets used by retirement funds and those suggested in the literature would not provide anadequate retirement income for most households. The results may thus have a significant impacton retirement planning in the future.