Longitudinal data are used to estimate retirement income replacement rates (RRs) of employees in Ireland who transitioned into retirement between 2010 and 2016. The median RR is estimated at 47 per ...cent, meaning that the majority of the retirees replaced less than half of their pre-retirement earnings with pension income. The distribution of RRs is highly skewed, with a mean of 73 per cent. The mean value seems high relative to stated policy goals, but the estimate is driven partly by very high RRs at the lower end of the earnings distribution. When a more comprehensive measure of income - incorporating pre-retirement pension income, post-retirement labour earnings and social welfare payments - is used, the mean RR falls to 52 per cent. The findings highlight the need for understanding the distribution of replacement rates and leads to a question as to whether policy goals in the areas of pension adequacy should be set with respect to income or consumption levels as opposed to RRs.
Even though Pip Hill opted for a gradual retirement from clinical research nursing, she had not anticipated the extent to which stopping work would hit her.
This study explores how deferred retirement benefits affect employee retention in the U.S. public sector. State government employees in Michigan transitioned from a defined‐benefit pension with ...10‐year vesting to a defined‐contribution plan with immediate vesting and less generous retiree health insurance benefits. Participation in either plan depends on date of hire, permitting a regression discontinuity research design. The shift away from generous deferred benefits caused a 5 percentage point decrease in the probability of remaining in state employment for at least a decade. The probability of leaving with four to nine years of tenure increased commensurately. Older professional workers were quite responsive to the design of their retirement benefits, whereas younger workers did not adjust their labor supply.
We use an overlapping generations framework to evaluate the transitional impact of state pension reform on public and private workers, extending our analysis to all fifty U.S. states. We consider ...reducing cost-of-living-adjustments (COLAs) for retirees and reducing benefit accruals for current workers. The magnitude of reform in each state is calibrated to achieve a common policy goal: the elimination of unfunded pension liabilities within twenty years.
Although each reform effectively decreases long run taxes by reducing pension liabilities, variation in fiscal and demographic features creates significant differences in state outcomes. Both reforms yield an asymmetry in welfare outcomes, providing gains to private workers through reduced taxes while causing losses to public workers due to reduced pension income. Wage compensation for affected public workers proves to be a valuable policy instrument for achieving better balance. In the aggregate, state level welfare gains are possible for both reforms.
•Delayed retirement has become the central policy response to population aging.•Working into one’s late 60s is difficult or impossible for many.•About half of older Americans were not steadily ...employed throughout their 50s.•Inequalities by race, class, and gender are exacerbated by working-longer policies.•Working longer in America calls for improved work and retirement policies.
We argue that if the United States wants to make delayed retirement a healthy reality in the future, policymakers must level the social and economic playing field for young and middle-aged workers. As it stands, precarious working conditions, family caregiving responsibilities, poor health, and age discrimination make it difficult or impossible for manytowork into their late 60s and beyond. Investments in better jobs today could lead to more secure retirements tomorrow. At the same time, we need a renovation of America’s retirement and disability systems to provide financial security for all Americans as they age. Our findings suggest that working longer is set in motion long before one’s 60s; it is structured by a life course history of working steadily through one’s 50s. We argue that policies affecting work and policies affecting retirement are two sides of the same coin and must be considered together.
This study examines the association between earmarking bequeathable assets and retirement satisfaction. Utilizing longitudinal data from the Health and Retirement Study, the authors examine the ...retirement satisfaction of retirees who have intentionally earmarked their bequeathable assets compared to retirees who have not. The findings suggest that earmarking bequeathable assets is associated positively with higher levels of retirement satisfaction.
We study the effects of increasing the statutory retirement age (SRA) in the Netherlands, using regression discontinuity design and administrative data on the universe of the population. We find ...clear and large employment effects of the reform. A simple model in which individuals stay longer in their pre-SRA labor market state predicts the treatment effects well. The employment level before the SRA and the retirement hazard at the SRA are the key determinants of the effects of the policy change. Exploring potential explanations for the high hazard rate observed in the Netherlands, our results point to an important role for employers’ effects. (JEL H55, J14, J26, J32)
We solve each household’s optimal saving decisions using a life cycle model that incorporates uncertain lifetimes, uninsurable earnings and medical expenses, progressive taxation, government ...transfers, and pension and social security benefits. With optimal decision rules, we compare, household by household, wealth predictions from the life cycle model using a nationally representative sample. We find, making use of household‐specific earnings histories, that the model accounts for more than 80 percent of the 1992 cross‐sectional variation in wealth. Fewer than 20 percent of households have less wealth than their optimal targets, and the wealth deficit of those who are undersaving is generally small.
Using longitudinal Survey of Income and Program Participation data linked to Social Security Administration administrative records from 2009 and 2012, we find negative economic shocks cause 401(k) ...contribution behavior to react in ways consistent with reactions to fear and past trauma. If employees participating in 401(k) plans did not experience real earnings declines or unemployment spells between 2009 and 2012, then their contribution rates would have been 5% higher and each person would have contributed US $193 more toward their defined contribution plan accounts. We conclude that previous studies may have swung too far in emphasizing inertia as a primary behavior trait explaining workers’ 401(k) plan engagement. Reactive behavior to protect living standards by reducing retirement savings is also important.
In this paper we study the consumption and portfolio selection problem of a finitely-lived economic agent with an early retirement option, that is, the agent can choose her/his early retirement time ...before a mandatory retirement time. Based on the theoretical results in Yang and Koo (Math Oper Res, 43(4):1378–1404, 2018), we derive an integral equation satisfied by the optimal retirement boundary or free boundary using the Mellin transform technique. We also derive integral equation representations for the optimal consumption-portfolio strategies and the optimal wealth process. By using the recursive integration method, we obtain the numerical solutions for the integral equations and discuss economic implications for the optimal retirement strategies by using numerical solutions.
PDF
