How Much and In What Manner Should Americans Save?

This document is about an analysis of how much Americans should be saving for retirement and in what form, using a life-cycle financial planning model called ESPlanner. The study examines the impact of current and future tax hikes, Social Security benefit cuts, and the elimination of tax-deferred retirement accounts on household consumption and saving patterns. It finds that a majority of households are borrowing constrained, leading to significant heterogeneity in recommended saving and consumption responses to policy changes. The paper also identifies a subset of households that may face higher lifetime taxes and lower lifetime consumption by contributing to tax-deferred retirement accounts, and discusses the potential benefits of shifting to Roth-style retirement accounts.