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How Do Local Labor Markets Affect Retirement?
Compared with prime-age workers, older workers face an easier path out of the labor force if they lose their jobs during a recession. However, premature job exits or earnings losses in the years leading up to retirement may be particularly devastating to retirement savings. The authors analyze the impact of recent business cycles on retirement using multifaceted job transitions of older workers. They focus on local labor markets because older workers are particularly unlikely to move for work. Surprisingly, the biggest effect of a higher local unemployment rate on older workers is to raise ...
Optimal retirement asset decumulation strategies: the impact of housing wealth
A considerable literature examines the optimal decumulation of financial wealth in retirement. We extend this line of research to incorporate housing, which comprises the majority of most households? non-pension wealth. ; We estimate the relationship between the returns on housing, stocks, and bonds, and simulate a variety of decumulation strategies incorporating reverse mortgages. We show that homeowner?s reversionary interest, the amount that can be borrowed through a reverse mortgage, is a surprisingly risky asset. Under our baseline assumptions we find that the average household would be ...