We measure financial literacy among LinkedIn members, complementing standard questions with additional questions that allow us to gauge self-perceptions of financial literacy. Average financial ...literacy is surprisingly low given the demographics of our sample: fewer than two-thirds of chief financial officers, chief executive officers, and chief operating officers complete the test correctly. Financial literacy, precautionary savings and retirement planning are positively correlated, but this is mostly driven by perceived, not actual, literacy: controlling for self-perceptions, actual literacy has low predictive power. Perceptions drive decision-making among low-literacy respondents and are associated with mistaken beliefs about financial products and less willingness to accept financial advice.
•Estimate the effects of an early retirement offer on health.•The opportunity to retire early reduced the number of days of inpatient care and reduced mortality.•The effect is larger for low SES.•The ...offer increased early retirement and decreased market work.•Suggestive evidence of increased costs for health care from a mandatory increase in retirement age.
This paper studies empirically the consequences on health of an early retirement offer. To this end we use a targeted retirement offer to military officers 55 years of age or older. Before the offer was implemented, the normal retirement age in the Swedish defense was 60 years of age. Estimating the effect of the offer on individuals’ health within the age range 56–70, we find support for a reduction in both mortality and in inpatient care as a consequence of the early retirement offer. Increasing the mandatory retirement age may thus not only have positive government income effects but also negative effects on increasing government health care expenditures.
Closing the Coverage Gap Holzmann, Robert; Robalino, David A; Takayama, Noriyuki
2009, 06-16-2009, 20090101
eBook, Book
Odprti dostop
Closing the Coverage Gap discusses how social pensions and other retirement income transfers can be used to close the coverage gap of mandatory pension systems. The book is organized in three parts. ...The first part makes the case for these programs by assessing the extent of the coverage gap around the world and evaluating the vulnerability to poverty of the elderly. The second part reviews the experiences of low, middle and high income countries with the design and implementation of retirement income transfers. The last part focuses on design issues. It analyses the incentive effect of these programs on labor supply and savings, fiscal costs, the role of targeting mechanisms, and alternatives in terms of institutional design and administration. The book also discusses the role of promising instruments such as matching contributions to reach parts of the informal sector.
This study used data from the 2018 National Financial Capability Study to investigate the association between financial hardship and retirement planning behaviors. Results from logistic regressions ...showed that respondents with high difficulty making ends meet were more likely to calculate retirement needs and more likely to own a non-employer sponsored retirement plan. The perceived over-indebtedness was positively associated with owning an employer-sponsored account while negatively associated with owning a non-employer-sponsored account. Financial fragility was associated with a lower likelihood of calculating retirement needs and having a retirement account. The results of additional generational analyses revealed that the difficulty making ends meet and the perceived over-indebtedness showed different patterns with retirement planning behavior across three generations. In contrast, financial fragility showed consistent and negative associations with the retirement planning behaviors across generations.
This paper provides comprehensive estimates of the savings effects of automatically enrolling employees in retirement plans. We use administrative U.S. tax data to measure the retirement savings of ...employees (and their spouses) at 745 firms. Consistent with prior findings, we estimate that automatic enrollment increases participation in the year after hire by 86 percent and retirement plan contributions by 51 percent. However, we also find employees are 33 percent more likely to take a non-rollover withdrawal, driven by employees who separate from their employer. Incorporating this offsetting behavior, we estimate net savings increase by 37 percent on average in the short run. Spouses do not alter their saving behavior. Over a longer time-horizon, the net savings effect for employees still employed by the same firm declines for high-wage employees and increases for low-wage employees. However, the net savings effect for employees who have separated from their firm declines substantially.
Inconsistent Retirement Timing Merkle, Christoph; Schreibe, Philipp; Weber, Martin
The Journal of human resources,
05/2024, Letnik:
59, Številka:
3
Journal Article
Recenzirano
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We study the effect of inconsistent time preferences on actual and planned retirement timing decisions in two independent data sets. Theory predicts that hyperbolic time preferences can lead to ...dynamically inconsistent retirement timing. In an online experiment with more than 2,000 participants, we find that time-inconsistent participants retire on average 1.75 years earlier than time-consistent participants do. The planned retirement age of nonretired participants decreases with age. This negative age effect is about twice as strong among time-inconsistent participants. The temptation of early retirement seems to rise in the final years of approaching retirement. Consequently, time-inconsistent participants have a higher probability of regretting their retirement decision. We find similar results for a representative household survey (German SAVE panel). Using smoking behavior and overdraft usage as time preference proxies, we confirm that time-inconsistent participants retire earlier and that nonretirees reduce their planned retirement age within the panel.
The distinguishing feature for many workers in South Korea is contractual - and often involuntary - retirement at a young age (mid-50s for most workers) followed by precarious and low-paying ...self-employment or contract work. In the past this practice, which is also found in other East Asian nations, provided firms with a youthful and highly productive workforce. However, with a rapidly aging population and shifts in the labour market, the existing arrangement is becoming less and less functional.
This book examines how this retirement arrangement arose, and the policy reforms that have been both undertaken and proposed to allow workers to remain employed longer. The analysis focuses on the institutional constraints to reforms, as well as the impact forced retirement has on individuals. Using a multi-disciplinary and comparative approach, the authors study contractual mandatory retirement trends and policies in South Korea, and in doing so illuminate the political, social, legal, economic and labour market implications of this widespread practice.
As nations across Asia face aging populations, this book will be welcomed by students and scholars interested in Korean studies, social policy, social welfare and gerontology. It will also be of great value to policy makers.
Annuitization Puzzles Benartzi, Shlomo; Previtero, Alessandro; Thaler, Richard H.
The Journal of economic perspectives,
10/2011, Letnik:
25, Številka:
4
Journal Article
Recenzirano
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In his Nobel Prize acceptance speech given in 1985, Franco Modigliani drew attention to the “annuitization puzzle”: that annuity contracts, other than pensions through group insurance, are extremely ...rare. Rational choice theory predicts that households will find annuities attractive at the onset of retirement because they address the risk of outliving one's income, but in fact, relatively few of those facing retirement choose to annuitize a substantial portion of their wealth. There is now a substantial literature on the behavioral economics of retirement saving, which has stressed that both behavioral and institutional factors play an important role in determining a household's saving accumulations. Self-control problems, inertia, and a lack of financial sophistication inhibit some households from providing an adequate retirement nest egg. However, interventions such as automatic enrollment and automatic escalation of saving over time as wages rise (the “save more tomorrow” plan) have shown success in overcoming these obstacles. We will show that the same behavioral and institutional factors that help explain savings behavior are also important in understanding 1) how families handle the process of decumulation once retirement commences and 2) why there seems to be so little demand to annuitize wealth at retirement.
This paper undertakes an assessment of a rapidly growing body of economic research on financial literacy. We start with an overview of theoretical research, which casts financial knowledge as a form ...of investment in human capital. Endogenizing financial knowledge has important implications for welfare, as well as policies intended to enhance levels of financial knowledge in the larger population. Next, we draw on recent surveys to establish how much (or how little) people know and identify the least financially savvy population subgroups. This is followed by an examination of the impact of financial literacy on economic decision making in the United States and elsewhere. While the literature is still young, conclusions may be drawn about the effects and consequences of financial illiteracy and what works to remedy these gaps. A final section offers thoughts on what remains to be learned if researchers are to better inform theoretical and empirical models as well as public policy.
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