Retirement and saving

The UK is regarded as having too low a level of savings, both to maintain the capital stock and to provide an adequate level of income in retirement without an increase in taxation. Pomerantz and Weale (2005) have a discussion of the savings shortfall that focuses on the maintenance of the wealthÐincome ratio, whilst Khoman and Weale (2006) and Turner (2006) investigate life cycle saving and the savings shortfall in relation to pensions. Economists are careful in the use of the term Ôtoo little' in relation to the outcomes of the decisions of optimising agents, and if we think there is a market failure, we have to describe that failure. Agents who are saving for retirement have to make decisions on the date at which they retire, the level of savings during their working lives and the level of consumption they will undertake when retired as well as whilst working. They may save too little because of misperceptions about their life expectancy or about the provision of publicly funded goods or money, such as health services and retirement pensions.