Download or read book Projected Retirement Wealth and Savings Adequacy in the Health and Retirement Study written by James F. Moore and published by . This book was released on 1997 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: Low saving rates raise questions about Americans' ability to maintain consumption levels in old age. Using the Health and Retirement Study, this paper explores asset holdings among a nationally representative sample of people on the verge of retirement. Making reasonable projections about asset growth, we assess how much more people would need to save in order to preserve consumption levels after retirement. We find that the median older household has current wealth of approximately $325,000 including pensions, social security, housing, and other financial wealth, an amount projected to grow to about $380,000 by retirement at age 62. Nevertheless, our model suggests that this median household will still need to save 16% of annual earnings to preserve pre-retirement consumption. For retirement at age 65, assets are expected to be about $420,000 and required additional saving totals 7% of earnings per year. These summary statistics conceal extraordinary heterogeneity in both assets and saving needs in the older population. Older high wealth households have 45 times more assets than the poorest decile and this disparity increases with age. There are also large differences in prescribed saving targets, ranging from 38% of annual earnings for those in the lowest wealth decile to negative rates for the wealthiest decile.
Download or read book PROJECTED RETIREMENT WEALTH AND SAVING ADEQUACY IN THE HEALTH AND RETIREMENT STUDY written by James F. MOORE and published by . This book was released on 1997 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Saving Wealth and Retirement written by Surachai Khitatrakun and published by . This book was released on 2003 with total page 182 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Forecasting Retirement Needs and Retirement Wealth written by Olivia S. Mitchell and published by University of Pennsylvania Press. This book was released on 2000 with total page 392 pages. Available in PDF, EPUB and Kindle. Book excerpt: Many new retirement-related opportunities and risks confront individuals and employers in the 21st century. Opportunities include the exciting prospects of living longer, living healthier, and living a more productive life than ever before. But the risks are also huge, including the challenge of setting an income goal and then saving enough for retirement, investing wisely in a time of financial turmoil, and planning carefully for a long period of time in retirement. What are retirement needs and how much will we need to save for old age? What is retirement becoming, especially in an era of downsizing and early retirement? What assets should we hold prior to and throughout the retirement period? How should we invest our pension assets, and how can education influence 401(k) plan saving? How important are employer-provided pensions and social security in protecting retirees against old-age poverty? And what special problems do minorities and women face? Forecasting Retirement Needs and Retirement Wealth draws on the latest information available on health, wealth, and retirement in America, to offer new perspectives on ways to support the expanding population of older citizens. As these novel paths to retirement emerge, paths that involve "bridge" jobs and gradual transitions through various states of employment, they force new thinking on the concept and process of retirement. Contributors explore the difficult problem of determining what resources people need during retirement and offer ways to think about how much to save for old age.Also in the Pension Research Council Publications series-- Prospects for Social Security Reform Edited by Olivia S. Mitchell, Robert J. Myers, and Howard Young ISBN 0-8122-3479-0 / Cloth Living with Defined Contribution Pensions Remaking Responsibility for Retirement Edited by Olivia S. Mitchell and Sylvester J. Schieber ISBN 0-8122-3439-1 / Cloth Positioning Pensions for the Twentieth-First Century Edited by Michael S. Gordon, Olivia S. Mitchell, and Marc M. Twinney ISBN 0-8122-3391-3 / Cloth
Download or read book Effects of Pensions on Savings written by Alan L. Gustman and published by . This book was released on 2000 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the composition and distribution of total wealth for a cohort of 51 to 61 year olds from the Health and Retirement Study (HRS), and the role of pensions in forming retirement wealth. Pension coverage is widespread, covering two thirds of households and accounting for one quarter of accumulated wealth. Social security benefits account for another quarter of total wealth. As calculated from earnings records, the present discounted value of social security benefits is less than the present value of taxes paid. Earlier than many expect, social security is already a poor investment on average for this cohort on the verge of retirement. When pensions and social security are included, wealth accumulated by the HRS population to date is substantial. At their expected retirement date, using only the wealth accumulated by their mid-fifties, the HRS household with median replacement rate could finance a fixed, nominal two-thirds joint and survivor annuity replacing 79 percent of last earnings, and a real annuity replacing 52 percent of last earnings. Replacement rates for median earners are higher. Additional savings made over the seven years remaining until retirement will raise those replacement rates by about a fifth. When measured against a standard of adequacy based on average yearly earnings over the worklife, with adjustments made for the absence of preretirement savings, children, taxes, work related expenses and other factors, these replacement rates appear adequate. Lifetime earnings are measured for each individual in the HRS from social security earnings records augmented by self reported earnings histories. When pensions and social security are counted in total wealth, the ratio of wealth to lifetime earnings declines from very high levels in the bottom ten percent of the earnings distribution, remains at roughly 40 percent from the 25th through 95th percentile of the lifetime earnings distribution, and then falls to 32 percent for those in the top five percent of the earnings distribution. This result is consistent with the predictions of a simple, stripped down life cycle model. Also consistent is a finding that the ratio of wealth to lifetime earnings is no higher for those with pensions than for those without pensions. However, heterogeneity is quite important. Real estate and business wealth are a larger share of total wealth for those without pensions, reflecting the importance of self employment in wealth accumulation. Multivariate regressions relating total wealth to pension coverage and pension value, which standardize for sources of heterogeneity, suggest that pensions cause very limited displacement of other wealth, if any. Pensions add to total wealth by at least half the value of the pension, and in most estimates by a good deal more. These findings are not consistent with a simple life cycle explanation for savings. They also raise questions about whether pensions are fundamentally a tax avoidance device, allowing substitution of pension for nonpension savings.
Download or read book Retirement Wealth Accumulation and Decumulation written by Olivia S. Mitchell and published by . This book was released on 1997 with total page 92 pages. Available in PDF, EPUB and Kindle. Book excerpt: Analysts have raised questions about current workers' ability and inclination to save" enough for retirement. This issue is of obvious policy interest given the current debate over" reforming national retirement income programs. This paper explores the implications of recent" research regarding retirement wealth accumulation and decumulation for this debate. Our goal is" to identify problems and opportunities in the area of preparedness for retirement."
Download or read book Aging and the Macroeconomy written by National Research Council and published by National Academies Press. This book was released on 2013-01-10 with total page 230 pages. Available in PDF, EPUB and Kindle. Book excerpt: The United States is in the midst of a major demographic shift. In the coming decades, people aged 65 and over will make up an increasingly large percentage of the population: The ratio of people aged 65+ to people aged 20-64 will rise by 80%. This shift is happening for two reasons: people are living longer, and many couples are choosing to have fewer children and to have those children somewhat later in life. The resulting demographic shift will present the nation with economic challenges, both to absorb the costs and to leverage the benefits of an aging population. Aging and the Macroeconomy: Long-Term Implications of an Older Population presents the fundamental factors driving the aging of the U.S. population, as well as its societal implications and likely long-term macroeconomic effects in a global context. The report finds that, while population aging does not pose an insurmountable challenge to the nation, it is imperative that sensible policies are implemented soon to allow companies and households to respond. It offers four practical approaches for preparing resources to support the future consumption of households and for adapting to the new economic landscape.
Download or read book Lifetime Earnings Social Security Benefits and the Adequacy of Retirement Wealth Accumulation written by Eric M. Engen and published by . This book was released on 2004 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides new evidence on the adequacy of household retirement saving. We depart from much previous research on the adequacy of saving in two key ways. First, our underlying simulation model of optimal wealth accumulation allows for precautionary saving against uncertain future earnings. Second, we employ data on lifetime earnings. Using data from the 1992 Health and Retirement Study, we find that households at the median of the empirical wealth-lifetime earnings distribution are saving as much or more as the underlying model suggests is optimal, and households at the high end of the wealth distribution are saving significantly more than the model indicates. But we also find significant undersaving among the lowest 25 percent of the population. We show that reductions in Social Security benefits could have significant deleterious effects on the adequacy of saving, especially among low-income households. We also show that, controlling for lifetime earnings, households with high current earnings tend to save far more adequately than other households.
Download or read book Growing Older in America written by and published by . This book was released on 2007 with total page 108 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Retirement Wealth and Its Adequacy written by Catherine Phillips Montalto and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper assesses whether the accumulated retirement wealth of pre-retirees will be adequate to cover needs during retirement, and how variation in age of eligibility for Social Security benefits affects adequacy. Data from the 1998 Survey of Consumer Finances are analyzed to assess the adequacy and composition of retirement wealth of U.S. households, and simulations are used to assess the impact of changes in the Social Security system. Unique contributions of the research include use of household specific information on portfolio allocation and planned retirement age, projection of retirement wealth using asset specific growth rates, and estimation of retirement needs based on household expenditure functions. The findings reveal that the average U.S. household receives approximately 46% of retirement wealth from Social Security, 39% from personal savings, and 14% from pensions. Approximately 56% of U.S. households are on track to be able to maintain their pre-retirement consumption level in retirement. However, retirement wealth adequacy rates and retirement wealth to needs ratios both increase with planned retirement age of the householder. Based on simulations, the impact of changes in the age of eligibility for full Social Security benefits on retirement wealth adequacy depends on behavioral responses to these changes.
Download or read book Imperfect Knowledge Retirement and Saving written by Alan L. Gustman and published by . This book was released on 2001 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using data from the Health and Retirement Study, this paper creates variables measuring knowledge about future social security and pension benefits by comparing respondent reports of their expected benefits with benefits calculated from social security earnings records and employer provided descriptions of pension plans. The knowledge measures suggest that misinformation, imprecision and lack of information about retirement benefits is the norm. Those who are most dependent on social security are the least well informed about their social security benefits, while those who are most dependent on pensions are best informed about their pension benefits. Women and minorities are less well informed about both types of retirement benefits. Having documented the extent of misinformation, we turn to questions about the production of information, and the consequences of misinformation for real outcomes. Relating measures of information to planning activities, we find that those who plan are somewhat better informed than those who do not, but with the exception of having requested a social security earnings record, the effects of planning activities on knowledge are modest. In descriptive and reduced form equations for planned and actual retirement and saving, there is at best a modest relation of knowledge measures to planned and actual retirement and to nonpension, nonsocial security wealth as a share of lifetime earnings. Individuals who overestimate their benefits are likely to retire sooner than they planned, but the measured effects are relatively modest. Coefficients of measures of the increase in reward from postponed retirement are barely affected by the addition of measures of respondent knowledge of their retirement benefits to standard reduced form retirement and wealth equations.
Download or read book Retirement Income written by Christian E. Weller and published by . This book was released on 2005 with total page 76 pages. Available in PDF, EPUB and Kindle. Book excerpt: Examines social security benefits within the context of other retirement savings programme.
Download or read book Effects of Pensions on Saving written by Thomas L. Steinmeier and published by . This book was released on 1998 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the composition and distribution of total wealth for a cohort of 51 to 61 year olds from the Health and Retirement Study (HRS), and the role of pensions in forming retirement wealth. Pension coverage is widespread, covering two thirds of households and accounting for one quarter of accumulated wealth. Social security benefits account for another quarter of total wealth. As calculated from earnings records, the present disco value of social security benefits is less than the present value of taxes paid. Earlier than many expect, social security is already a poor investment on average for this cohort on the verge of retirement. Lifetime earnings are measured for each individual in the HRS from social security earnings records augmented by self reported earnings histories. This result is consistent with the predictions of a stripped down life cycle model. Also consistent is a finding that the ratio of wealth to lifetime earnings is no higher for those with pensions than for those without pensions. Multivariate regressions relating total wealth to pension coverage and pension value, suggest that pensions cause very limited displacement of other wealth, if any. Pensions add to total wealth by at least half the value of the pension, and in most estimates by a good deal more. These findings are not consistent with a simple life cycle explanation for savings. They also raise questions about whether pensions are fundamentally a tax avoidance device, allowing substitution of pension for nonpension savings
Download or read book Adequacy of Preparation for Retirement written by Yoonkyung Yuh and published by . This book was released on 1998 with total page 374 pages. Available in PDF, EPUB and Kindle. Book excerpt: Simulation results show that stock investments significantly increase the accumulation of adequate wealth for retirement, and also significantly reduce the required saving rates to compensate for the gap between retirement wealth and consumption needs of households with inadequate retirement wealth.
Download or read book Pension Participation Wealth and Income written by Alicia H. Munnell and published by . This book was released on 2016 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using data from the 1992, 1998, 2004, and 2010 waves of the Health and Retirement Study (HRS), this paper compares pension participation, pension wealth, projected retirement income, and replacement rates attributable to past service, by pension type for households ages 51-56. The analysis includes workers' pension coverage during both current and past jobs. Defined contribution (DC) wealth is simply the current account balance. DC income is calculated by projecting current plan balances to retirement, assuming no further contributions, and assuming that households then annuitize. Defined benefit (DB) wealth and income are calculated by apportioning projected benefits to past and future service.This paper found that: • Overall participation is significantly lower in 2010 than in previous waves; the increase in DC participation has not offset the decline in DB participation. • Both mean and median pension wealth in 2010 were larger than in 1992, but lower than in 1998 and 2004. • DC wealth is more skewed towards the top quartile than DB wealth. In 2010, the top quartile held 35 percent of DB compared to 52 percent of DC wealth. • Because DC participants must purchase an actuarially unfair annuity and faced low annuity rates from falling interest rates, the shift to DC plans has produced a decline in the ratio of income to wealth. • The decline in the income-to-wealth ratio would have been even greater if expected retirement ages had not increased. • But, despite later retirement, the ratio of projected retirement income to the highest five years of 51-56 earnings declined substantially from 1998-2010 because earnings have risen. The policy implications of this paper are:• Employer-sponsored plans are providing less today than in the past, so policymakers should consider ways to improve coverage and outcomes. • When restoring balance to Social Security finances, policymakers need to recognize that future retirees will be more dependent on Social Security than those in the past.
Download or read book Pensions in the Health and Retirement Study written by Alan L. Gustman and published by Harvard University Press. This book was released on 2010-05 with total page 404 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book presents a careful analysis of pension data collected by the Health and Retirement Study, a unique survey of people over the age of fifty conducted by the University of Michigan for the National Institute on Aging. The authors studied pensions as they evolve over individuals’ work lives and into retirement: how pension coverage and plans change over a lifetime, how many pensions workers have by the time they retire and what these pensions are worth, what pensions contribute to individual retirement incomes, and how trends and policy changes affect retirement plans. The book focuses on the major features of pensions, including plan type and participation, ages of eligibility for retirement, values of different pension types, how pension values are influenced by retirement age, how plans are settled when a worker leaves a firm, how well people understand their pensions, the importance of pensions in retirement saving and as a share of household wealth, and the vulnerability of the retirement age population to the current financial crisis. This book provides readers with an invaluable look at the crucial but ever-changing role of pensions in supporting retirees.
Download or read book Retirement Planning written by United States. Congress. Senate. Special Committee on Aging and published by . This book was released on 2004 with total page 80 pages. Available in PDF, EPUB and Kindle. Book excerpt: