Various studies regarding adequacy of retirement savings have used widely differing data and assumptions and produce widely ranging and somewhat contradictory results, according to an analysis by the Employee Benefits Research Institute.
The analysis did not endorse any one particular approach nor conclude that any were not valid, but instead cautioned that making life decisions about retirement is a complex and highly individual task.
It noted that different studies use different definitions of what level of retirement income is "adequate" or what must be in place for an individual to be deemed "ready" for retirement. Similarly, studies use different models for projecting growth of retirement savings, periods over which savings may have to be drawn down, and potential outlays for health care costs—including the possibility of major expenses for events such as an extended, uninsured stay in a nursing home.
One thing the studies had in common, was a conclusion that large numbers of people will fall short of what they need, and that extending working careers—especially while continuing to participate in defined contribution retirement plans such as the TSP—will help.
Said the report: "It would be comforting from a public-policy standpoint to assume that merely working to age 70 would be a panacea to the significant challenges of assuring retirement-income adequacy (especially among lower-income families), butt his may be a particularly risky strategy for this vulnerable group in view of the uncertainties of their future health status and the marketability of their job skills.
"While workers need to make their own decisions on the correct trade-offs of saving today vs. deferring retirement, they should be able to expect that those presenting alternatives be as accurate and complete as possible, avoiding simplistic ‘rules of thumb’ that may result in future retirees, through no fault of their own, coming up short."
