Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72 Page 73 Page 74 Page 75 Page 76 Page 77 Page 78 Page 79 Page 80 Page 81 Page 82 Page 83 Page 84 Page 85 Page 86 Page 87 Page 88 Page 89 Page 90 Page 91 Page 92 Page 93 Page 94 Page 95 Page 96 Page 97 Page 98 Page 99 Page 100 Page 101 Page 102 Page 103 Page 104 Page 105 Page 106 Page 107 Page 108AGING IN THE 21S T CENTURY 50 CHAPTER 3 | ECONOMIC PREPARATION FOR RETIREMENT In the ideal retirement scenario, households have sufficient economic resources to maintain or even improve on the lifestyle they had during their working years. Currently, this is feasible for many Americans through a combination of sources including Social Security, employer-provided public and private pensions, and personal savings. HRS research has increased our understanding of the value and importance of each of these resources by addressing a range of questions. What motivates people to save for retirement? What factors affect financial security in retirement? How do households spend or conserve their savings throughout retirement? R esearch on economic readiness for retire- ment focuses on two stages of the life cycle: the accumulation of wealth during working years and the drawdown of wealth during retire- ment. Both aspects influence financial well-being in retirement. On average, many households are well prepared, though some groups are much less so. Public and private programs are influential in decisions about whether to save and how much. Personal factors, such as financial literacy and personality, come into play as well. Spending patterns change before, after, and throughout retirement with health expenditures playing an increasingly larger role at older ages. Ready or Not? Social Security, pensions and private savings comprise the well-known three-legged stool of retirement. Together these sources of income can provide a secure foundation of financial well- being in retirement: none is meant to serve as the only source. For many people, income needs tend to fall in retirement for a variety of reasons: tax rates are generally lower in retirement; work- related costs diminish or disappear; children are less of an expense; and people substitute time for purchased goods. Thus, some experts suggest that individuals should aim to have enough across all three legs to replace about 70 to 85% of the income they had while working — though advice regarding the ideal replacement rate varies.