Wealth & Risk Management Blog

William Byrnes (Texas A&M) tax & compliance articles

The Psychology of Saving: If We’re Living Longer, Why Are We Saving Less?

Posted by William Byrnes on November 29, 2011


In addition to confirming earlier beliefs, a new academic study about the effects of increase life-spans on savings rates has inspired new intrigue.

The conclusions reached by Optimal Retirement and Saving with Increasing Longevity, by David E. Bloom, David Canning, and Michael Moore are simple enough but need some further discussion: “[A] higher level of wages leads to earlier retirement and increasing savings rates. On the other hand an increase in life expectancy leads to an increase [in] the retirement age, but less than proportionately, while reducing savings rates.”

Consequently, the importance of planning for middle-income families increases. Without a solid plan, many are left working many more years than they hoped or planned.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of retirement values in Advisor’s Journal, see Appealing to Your Affluent Clients’ Retirement Planning Values (CC-11-42).

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