Calling a spade a spade

Yesterday, I read with some surprise the NY Times' article saying that some maverick economists claim Americans are saving too much for retirement. I concluded the whole thing was a crock, but, since I hadn't actually read any of the underlying research, I didn't comment on it. Kevin Drum, however, finds more than enough in the Times' article itself to destroy it thoroughly:

If you read through it, it presents a grand total of three pieces of evidence for this view. Here they are:

• A study of the generation born between 1931 and 1941 "revealed that at least 80 percent had accumulated more than enough wealth for retirement."

  This is absurd. This cohort is one of the most singular generations in American history: they were born during the Depression, had famously high savings rates, came of age during the go-go 60s, often had generous pensions, and had a very high Social Security payout compared to the taxes they paid in. Of course most of them had enough wealth for retirement. This is like studying the NBA and reporting back that Americans are taller than you think.

• Another study found that "88 percent of retirees age 51 and older had adequate wealth."

  Again, this means nothing. Almost by definition, retirees between the age of 51 and 65 are those who have saved enough to retire comfortably. The ones who haven't (the vast majority) aren't retired yet and are automatically excluded from this study. As for the retirees over age 65, they're part of an older generation that we already know had high savings rates.

• Laurence Kotlikoff, a Boston University economics professor, thinks people save too much.

  Why? The article doesn't really say, except to tell us that Kotlikoff has invented his own retirement planning software that he's trying to market. His selling point is that his software produces different results than the calculators used by most financial planning firms.

I have no more than casual anecdotal evidence on this, but from the people I see around me, I don't see much savings going on, and most fear they will have to work well into their "retirement" years just to keep afloat.