|Title||A Cross-Country Comparison of Old Age Financial Readiness in Asian Countries vs. the United States: The Case of Japan and the Republic of Korea|
|Year of Publication||2022|
|Authors||Ehrlich, I, Yin, Y|
|Series Title||NBER Working Papers|
|Institution||National Bureau of Economic Research|
|Keywords||financial readiness, JSTAR, KLoSA, Sister studies|
We pursue a cross-country comparison of relative financial readiness of older households in Japan and the Republic of Korea relative to the US. Our comparative analysis, using macro-level and harmonized longitudinal household financial data, covers the principal financial channels of old age support: public and private pension plans, family support, and self-management of private financial portfolios. We find that while all three countries have similar public pension systems, older Americans benefit from more developed and better-funded public and private pension systems, as well as individual management of risky financial portfolios. We find that educational and health attainments of household heads and household wealth lead to a greater tendency to hold and manage risky assets. Our decomposition analysis also shows that the gap in stock ownership in Asian countries relative to the US is attributable to lower development levels of financial and pension markets. However, these gaps are shrinking more recently.