Description

The savings shortfall

Numerous studies have predicted a
large retirement ‘savings gap’ — the
shortfall in current or projected pension
provisioning from a benchmark level of
retirement income. The figure of 70% of
pre-retirement income has become the
heuristic benchmark, often termed a 70%
‘replacement rate’. Though sometimes
criticised for arbitrariness, it is actually
supported by the economic and social
science literature since the 1960s
(Modigliani 1966).