The Federal Budget -- and Ours

David Ignatius's evidence of a "retirement crisis" is mostly anecdotal ["Boomers Going Bust," op-ed, May 7]. Analyzing whether someone will have sufficient retirement income demands a knowledge of the person's resources, which include Social Security, pensions and private savings, as well as the working-age incomes that retirement savings seek to replace.

In published work, John Karl Scholz and Ananth Seshadri of the University of Wisconsin and Surachai Khitatrakun of the Urban Institute found that nearly 85 percent of Americans born between 1931 and 1941 have sufficient retirement income resources and that savings shortfalls, where they exist, are generally small. In later work, they tentatively find that baby boomers born through 1954 are also preparing well for retirement.

My own work found that the typical retiree born in 1940 has a combined Social Security and pension income equal to 92 percent of pre-retirement earnings. Most financial advisers recommend a replacement rate of 70 to 80 percent. Among the bottom third of the lifetime earnings distribution, only around 10 percent have replacement rates below 60 percent. Future retirees will receive lower replacement rates from Social Security, but if they work even a year longer than current retirees did they can have income replacement rates resembling those of retirees today.

Casual talk of a "crisis" can lead policymakers to act before they think. Given the stakes, that would be unfortunate.

ANDREW G. BIGGS

Resident Scholar

American Enterprise Institute

Washington

Before joining AEI, the writer was principal deputy commissioner of the Social Security Administration.