Scaring People into Inaction?

August 1997
Journal of Financial Planning;Aug1997, Vol. 10 Issue 4, p15
Academic Journal
This article reports on how poorly U.S. citizens are saving for retirement. One of the latest surveys is from the 1997 Merrill Lynch Baby Boom Retirement Survey, which said boomers are saving only 38.5 percent of what they need for retirement. T. Rowe Price says they are needlessly scaring people because they really do not need as much money as they think. T. Rowe Price's research claims that most retirement plan programs overestimate the amount that people need to save for retirement because they overestimate the impact of taxes. First, the programs always calculate income taxes on the marginal rates, not the lower effective rates. Second, for many retirees, Social Security benefits are not even taxed.


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