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Working Paper
Health, Health Insurance, and Retirement: A Survey
The degree to which retirement decisions are driven by health is a key concern for both academics and policymakers. In this paper we survey the economic literature on the health-retirement link in developed countries. We describe the mechanisms through which health affects labor supply and discuss how they interact with public pensions and public health insurance. The historical evidence suggests that health is not the primary source of variation in retirement across countries and over time. Furthermore, declining health with age can only explain a small share of the decline in employment ...
Working Paper
Human Capital and Long-Run Labor Income Risk
This review article examines the role of labor income risk in determining the value of a person?s human capital. We draw on the existing literature to present a model that incorporates various types of shocks to earnings. Within this framework, we highlight the implications of different assumptions about the correlation between market returns and labor income growth for the value of human capital and its riskiness. Further, the article surveys other work that applies similar ideas to assess the value and risk of pension promises. Finally, we discuss how to enrich the environment with ...
Working Paper
The Evolution of Retirement Wealth
Is the current mix of tax preferences for employer-sponsored pensions and individual retirement saving in the U.S. delivering the best possible retirement-preparedness across and within generations? Using data from the triennial Survey of Consumer Finances for 1989 through 2013, cohort-based analysis of life-cycle trajectories shows that (1) overall retirement plan participation was relatively stable or even rising through 2007, though participation fell noticeably in the wake of the Great Recession and has remained lower, (2) participation is strongly correlated with income, and the shift in ...
Journal Article
Wealth Effects with Endogenous Retirement
In this article, we study wealth effects, i.e., the response of consumption to exogenous changes in wealth. We use a consumption-saving model with endogenous retirement to show that the endogenous response of the value of a worker's human capital to changes in her wealth helps to account for the weak wealth effects observed in the data.
Journal Article
When States Default: Lessons from Law and History
This Commentary discusses how a severe fiscal crisis at the state level could impact the interests of the state?s public pension holders. Drawing lessons from the relevant laws, historical precedents, and the case of Arkansas after its default in 1933, I argue that in spite of the protections that exist, no public retirement system is completely immune to impairment if the money runs out.
Newsletter
Savings after Retirement: A Survey
Retired U.S. households, especially those with high income, decumulate their assets more slowly than implied by the basic life cycle model. The observed patterns of out-of-pocket medical expenses, which rise quickly with age and income during retirement, and longevity, which also rises with income, can explain a significant portion of U.S. retirement saving. However, more work is needed to disentangle these precautionary motives from other motives, such as the desire to leave bequests.
Newsletter
Reforming Social Security to Save Social Security
The biggest social safety net in the United States is the Social Security program, which provides retirement benefits totaling almost $900 billion to 54 million individuals. It is a concern for all but the wealthiest, then, that Social Security faces insolvency: The U.S. Social Security Administration predicts that in 2020, the costs of the program will exceed its income. This suggests it is critical for policymakers to evaluate whether there is a path for social security reform that will improve people?s welfare both before and after retirement while restoring the program?s solvency.
How Financially Fit Are American Retirees?
From 1989 to 2016, the wealth of retired households increased in real terms. But data also indicated that wealth inequality worsened among retirees.