This paper is an update to an earlier analysis (Warshawsky and Ameriks 2000) of the predictions of financial planning software regarding Americans" preparedness for retirement. Data from the 1995 Survey of Consumer Finances is used, along with a "planning software simulation" algorithm to generate an assessment of whether American households are saving enough to fund retirement. Mr. Ameriks finds that for 48.5 percent of households, the algorithm predicts that assets and planned saving are insufficient to fund retirement. This assessment is not based on an economic model, but rather on methods and assumptions employed in financial planning software. As such, the analysis provides a measure of savings adequacy that may accord more closely with individual perceptions, and may reflect the savings advice that individuals would typically receive from a software package or from financial professionals.
