Retirement Wealth and Lifetime Earnings Variability

TitleRetirement Wealth and Lifetime Earnings Variability
Publication TypeReport
Year of Publication2003
AuthorsMitchell, OS, Phillips, JWR, Au, A, McCarthy, D
Series TitlePension Research Council Publications
Document NumberWP2003-04
InstitutionUniversity of Pennsylvania, Wharton School
Call Numberwp_2003/Mitchell_etal.pdf
KeywordsNet Worth and Assets, Social Security

This paper explores understand how earnings variability influences peoples’ retirement preparedness by influencing their accumulated wealth levels as of retirement age. Prior research has demonstrated that the US average household nearing retirement would need to save substantially more in order to preserve consumption in old age. While some socioeconomic factors have been suggested that might explain shortfalls, previous studies have not assessed the role of earnings variability over the lifetime as a potential explanation for poor retirement prospects. Thus two workers having identical levels of average lifetime earnings might have had very different patterns of earnings variability over their lifetimes. Such differences could translate into quite different retirement wealth outcomes. We evaluate the effect of earnings variability on retirement wealth using information supplied by respondents to the Health and Retirement Study (HRS). This is a rich and nationally representative dataset on Americans on the verge of retirement, with responses linked to administrative records from the Social Security Administration. Our research illuminates key links between lifetime earnings variability and retirement wealth.



Endnote Keywords

Retirement Wealth/Earnings and Benefits File

Endnote ID


Citation Key5547