@article {9558, title = {The Affordable Care Act as retiree health insurance: implications for retirement and Social Security claiming}, journal = {Journal of Pension Economics and Finance}, volume = {18}, year = {2019}, pages = {415-449}, type = {Journal}, abstract = {This paper investigates the effects of the Affordable Care Act (ACA) on retirement. The first part of the paper is a difference-in-difference analysis of changes in retirement (and retirement expectations) before and after adoption of the ACA. We find no statistically significant evidence that ACA increased the propensity to retire or changed retirement expectations. The second part of the analysis is based on a structural retirement model. For those age 50 at the time ACA was introduced, the overall reduction in full-time work over the age span 54{\textendash}65 is simulated to be about 0.1 percentage points. Data are from the Health and Retirement Study.}, keywords = {Affordable Care Act, Pensions, Policy, Retirement Planning and Satisfaction, Social Security}, issn = {1474-7472}, doi = {10.1017/S1474747218000033}, url = {https://www.cambridge.org/core/journals/journal-of-pension-economics-and-finance/article/affordable-care-act-as-retiree-health-insurance-implications-for-retirement-and-social-security-claiming/24601D49E42B0714381FC2B9F4D55D10}, author = {Alan L Gustman and Thomas L. Steinmeier and N. Tabatabai} } @book {10032, title = {The role of health in retirement}, volume = {46}, year = {2018}, pages = {229 - 297}, publisher = {Emerald Publishing Limited}, organization = {Emerald Publishing Limited}, address = {Bingley}, abstract = {A dynamic model of the evolution of health for those over the age of 50 is embedded in a structural, econometric model of retirement and saving. Effects of smoking, obesity, alcohol consumption, depression, and other proclivities on medical conditions are analyzed, including hypertension, diabetes, cancer, lung disease, heart problems, stroke, psychiatric problems, and arthritis. Compared to a population in good health, the current health of the population reduces retirement age by about one year. Including detailed health dynamics in a retirement model does not influence estimates of the marginal effects of economic incentives on retirement. }, keywords = {Health Conditions and Status, Medicare/Medicaid/Health Insurance, Retirement Planning and Satisfaction}, isbn = {978-1-78756-462-6}, issn = {0147-9121}, doi = {10.1108/rlec10.1108/S0147-912120184610.1108/S0147-912120180000046007}, author = {Alan L Gustman and Thomas L. Steinmeier}, editor = {Solomon W. Polachek and Tatsiramos, Konstantinos} } @article {8837, title = {The Affordable Care Act as Retiree Health Insurance: Implications for Retirement and Social Security Claiming}, number = {Working Paper 22815}, year = {2016}, month = {11/2016}, pages = {1-55}, institution = {National Bureau of Economic Research}, address = {Cambridge, MA}, abstract = {Using data from the Health and Retirement Study, we examine the effects of the Affordable Care Act (ACA) on retirement. We first calculate retirements (and in related analyses changes in expected ages of retirement and/or Social Security claiming) between 2010, before ACA, and 2014, after ACA, for those with health insurance at work but not in retirement. This group experienced the sharpest change in retirement incentives from ACA. We then compare retirement measures for those with health insurance at work but not in retirement with retirement measures for two other groups, those who, before ACA, had employer provided health insurance both at work and in retirement, and those who had no health insurance either at work or in retirement. To complete a difference-in-difference analysis, we make the same calculations for members of an older cohort over the same age span. We find no evidence that ACA increases the propensity to retire or changes the retirement expectations of those who, before ACA, had coverage when working but not when retired.}, keywords = {Affordable Care Act, Health Insurance, Older Adults, Retirement Planning and Satisfaction, Social Security}, doi = {10.3386/w22815}, url = {http://www.nber.org/papers/w22815.pdf}, author = {Alan L Gustman and Thomas L. Steinmeier and N. Tabatabai} } @article {5847, title = {Distributional Effects of Means Testing Social Security: An Exploratory Analysis}, number = {Working Paper No. 22424}, year = {2016}, pages = {1-28}, institution = {Cambridge, MA, National Bureau of Economic Research}, abstract = {This paper examines the distributional implications of introducing additional means testing of Social Security benefits where proceeds are used to help balance Social Security{\textquoteright}s finances. Benefits of the top quarter of households ranked according to the relevant measure of means are reduced using a modified version of the Social Security Windfall Elimination Provision (WEP). The replacement rate in the first bracket of the benefit formula, determining the Primary Insurance Amount (PIA), would be reduced from 90 percent to 40 percent of Average Indexed Monthly Earnings (AIME). Four measures of means are considered: total wealth; an annualized measure of AIME; the wealth value of pensions; and a measure of average indexed lifetime W2 earnings. The empirical analysis is based on data from the Health and Retirement Study. These means tests would reduce total lifetime household benefits by 7 to 9 percentage points. We find that the basis for means testing Social Security makes a substantial difference as to which households have their benefits reduced, and that different means tests may have different effects on the benefits of families in similar circumstance. We also find that the measure of means used to evaluate the effects of a means test makes a considerable difference as to how one would view the effects of the means test on the distribution of benefits.}, keywords = {Net Worth and Assets, Public Policy, Social Security}, author = {Alan L Gustman and Thomas L. Steinmeier and N. Tabatabai} } @article {5881, title = {Declining Wealth and Work Among Male Veterans in the Health and Retirement Study}, year = {2015}, institution = {Cambridge, MA, National Bureau of Economic Research}, abstract = {The composition, wealth and employment of male veterans and nonveterans are analyzed for four cohorts from the Health and Retirement Study, ages 51 to 56 in 1992, 1998, 2004 and 2010. Half of the men in the two oldest cohorts served in the military. Only 16 percent of the men in the youngest cohort, the only cohort subject to the All-Volunteer Military, served. One fifth to one third of the members of each cohort who served saw combat, mainly in Viet Nam and in the First Gulf War. Among those 51 to 56 in 1992, veterans were better educated, healthier, wealthier, and more likely to be working than nonveterans. By the 2010 cohort, 51 to 56 year old veterans had lost their educational advantage over nonveterans, were less healthy, less wealthy and less likely to be working. After standardizing in multiple regressions for the influence of major observable characteristics, for the original 1992 HRS cohort the wealth of veterans is no longer higher than the wealth of nonveterans. In contrast, the wealth of veterans from the youngest cohort, those 51 to 56 in 2010, remains about 10 to 13 percent below the wealth of nonveterans from that cohort. There also is a decline from older to younger cohorts of veterans compared to nonveterans in the probability of being not retired, of working more than 35 hours per week, and in the likelihood of holding a job for more than 10 years. Comparisons are made within the group of veterans by years of service, officer rank and other covariates.}, keywords = {Demographics, Net Worth and Assets}, author = {Alan L Gustman and Thomas L. Steinmeier and N. Tabatabai} } @article {8217, title = {Effects of social security policies on benefit claiming, retirement and saving}, journal = {Journal of Public Economics}, volume = {129}, year = {2015}, note = {Export Date: 9 September 2015}, pages = {51-62}, publisher = {129}, abstract = {An enhanced version of a structural model jointly explains benefit claiming, wealth and retirement, including reversals from states of lesser to greater work. The model is estimated with Health and Retirement Study data. Alternative beliefs about the future of Social Security affect claiming behavior. Effects of three potential policies are also examined: increasing the early entitlement age, increasing the full retirement age, and eliminating the payroll tax for seniors. Predicted responses to increasing the full entitlement age are sensitive to beliefs. 2015 Elsevier B.V.}, keywords = {Consumption and Savings, Event History/Life Cycle, Health Conditions and Status, Methodology, Pensions, Retirement Planning and Satisfaction, Social Security}, doi = {10.1016/j.jpubeco.2015.07.005}, url = {http://www.scopus.com/inward/record.url?eid=2-s2.0-84939170804andpartnerID=40andmd5=5f9a5d50350fd2d4594bc7142c636dc6}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {5888, title = {The Great Recession, Retirement and Related Outcomes}, year = {2015}, institution = {Cambridge, MA, National Bureau of Economic Research}, abstract = {This paper uses data from the Health and Retirement Study to examine retirement and related labor market outcomes for the Early Boomer cohort, those in their mid-fifties at the onset of the Great Recession. Outcomes are then compared with older cohorts at the same age. The Great Recession increased their probability of being laid off and the length of time it took to find other full-time employment. Differences in layoffs between those affected by the recession and members of older cohorts in turn accounted for almost the entire difference between cohorts in employment change with age. The Great Recession does not appear, however, to have depressed the wages in subsequent jobs for those who experienced a layoff. In 2010, 17 percent of the Early Boomers were Not Working and Not Retired or Partially Retired, and 6 percent were unemployed, leaving at least 9 percent who were not working and not unemployed but not retired or only partially retired. At the recession s peak, half of those who experienced a layoff ended up in the Not Retired or Partially Retired, Not Working category. But only a quarter of those who declared themselves to be Not Retired or Partially Retired, and were Not Working, had experienced a layoff. Most of the jump in Not Retired or Partially Retired, Not Working appears to reflect a change in expectations about the potential or need for future work, a change that is not the result of an actual job loss.}, keywords = {Employment and Labor Force, Expectations, Public Policy}, author = {Alan L Gustman and Thomas L. Steinmeier and N. Tabatabai} } @article {8218, title = {Retirement and the Great Recession}, journal = {Journal of Retirement}, volume = {3}, year = {2015}, pages = {87-106}, publisher = {3}, abstract = {This article uses data from the Health and Retirement Study to examine retirement and related labor market outcomes for the Early Boomer cohort, those in their mid-fifties at the onset of the Great Recession. Outcomes are then compared with older cohorts at the same age. The Great Recession increased their probability of being laid off and the length of time needed to find other full-time employment. Differences in layoffs between those affected by the recession and members of older cohorts in turn accounted for almost the entire difference between cohorts in employment change with age. However, The Great Recession does not appear to have depressed wages in subsequent jobs for those who experienced a layoff. In 2010, 17 of the Early Boomers were Not Working and Not Retired or Partially Retired, and 6 were unemployed, leaving at least 11 percent who were not unemployed but not retired or only partially retired. At the recession s peak, half of those who experienced a layoff ended up in the Not Retired or Partially Retired, Not Working category. But only a quarter of those who declared themselves to be Not Retired or Partially Retired, and were Not Working, had experienced a layoff. Most of the jump in Not Retired or Partially Retired, Not Working appears to reflect a change in expectations about the potential or need for future work, a change that is not the result of an actual job loss.}, keywords = {Employment and Labor Force, Public Policy, Retirement Planning and Satisfaction}, doi = {10.3905/jor.2015.3.1.087}, author = {Alan L Gustman and Thomas L. Steinmeier and N. Tabatabai} } @article {5850, title = {The Great Recession, Decline and Rebound in Household Wealth for the Near Retirement Population}, year = {2014}, institution = {Cambridge, MA, National Bureau of Economic Research}, abstract = {This paper uses data from the Health and Retirement Study to examine the effects of the Great Recession on the wealth held by the near retirement age population from 2006 to 2012. For the Early Boomer cohort (ages 51 to 56 in 2004), real wealth in 2012 remained 3.6 percent below its 2006 value. This is a modest decline considering the fall in asset values during the Great Recession. Much of the decline in wealth over the 2006 to 2010 period was cushioned by wealth originating from Social Security and defined benefit pensions. For the most part, these are stable sums that ensured a major fraction of total wealth did not decline as a result of the recession. The rebound in asset values observed between 2010 and 2012 mitigated, but did not erase, the asset losses experienced in the first years of the Great Recession. Effects of the Great Recession varied with the household{\textquoteright}s initial wealth. Those who were in the highest wealth deciles typically had a larger share of their assets subject to the influence of declining markets, and were hurt most severely. Unlike those falling in lower wealth deciles, they have yet to regain all the wealth they lost during the recession. Recovering losses in assets is only part of the story. The assets held by members of the cohort nearing retirement at the onset of the recession would normally have grown over ensuing years. Members of older HRS cohorts accumulated assets rapidly in the years just before retirement. Those on the cusp of retiring at the onset of the recession would be much better off had they had enjoyed similar growth in assets as experienced by members of older cohorts. The bottom line is that the losses in assets imposed by the Great Recession were relatively modest. The recovery has helped. But much of the remaining penalty due to the Great Recession is in the failure of assets to grow beyond their initial levels.}, keywords = {Health Conditions and Status, Net Worth and Assets, Public Policy}, author = {Alan L Gustman and Thomas L. Steinmeier and N. Tabatabai} } @article {7987, title = {Mismeasurement of pensions before and after retirement: the mystery of the disappearing pensions with implications for the importance of Social Security as a source of retirement support}, journal = {Journal of Pension Economics and Finance}, volume = {13}, year = {2014}, pages = {1-26}, publisher = {13}, abstract = {A review of the literature suggests that when pension values are measured by the wealth equivalent of promised defined benefit pension benefits and defined contribution balances for those approaching retirement, pensions account for more support in retirement than is suggested when their contribution is measured by incomes received directly from pension plans by those who have already retired. Estimates from the Health and Retirement Study for respondents in their early fifties suggest that pension wealth is about 82 as valuable as Social Security wealth. In data from the Current Population Survey (CPS), for members of the same cohort, measured when they are 65-69, pension incomes are about 58 as valuable as incomes from Social Security. Our empirical analysis uses data from the HRS to examine the reasons for these differences in the contributions of pensions as measured in income and wealth data. Key factors accounting for these differences include: a difference in methodology between surveys affecting what is included in pension income; some pension wealth {\textquoteright}disappears{\textquoteright} at retirement because respondents change their pension into other forms that are not counted as pension income; and the form of annuitization may influence the measure of pension income. A series of caveats notwithstanding, the bottom line is that CPS data on pension incomes received in retirement understates the full contribution pensions make to supporting retirees. PUBLICATION ABSTRACT}, keywords = {Net Worth and Assets, Pensions, Public Policy, Retirement Planning and Satisfaction, Social Security}, author = {Alan L Gustman and Thomas L. Steinmeier and N. Tabatabai} } @article {NBERw19902, title = {The Role of Health in Retirement}, year = {2014}, institution = {NBER}, abstract = {This paper constructs and estimates a dynamic model of the evolution of health for those over the age of 50 and then embeds that model of health dynamics in a structural, econometric model of retirement and saving. The health model traces the effects of smoking, obesity, alcohol consumption, depression and other proclivities on medical conditions, including hypertension, diabetes, cancer, lung disease, heart problems, stroke, psychiatric problems and arthritis. These in turn influence an overall index of health status based on self-reported health, work limitations and ADLs, which is used to classify the population into good, fair, poor or terrible health. Compared to a situation where the entire population is in good health, the current health status of the population reduces the retirement age of the entire population by an average of about one year. While poor health or terrible health have a great impact on the disutility of work and thus on retirement, fair health as opposed to good health has a relatively minor effect. Smoking depresses full-time work effort by up to 3.5 percentage points by those in the early sixties, reducing the average retirement age by four to five months. Effects of trends in health care and health policies on retirement are also analyzed. Including detailed measurement of health dynamics in a retirement model improves understanding of the effects of health on retirement. It does not, however, influence estimates of the marginal effects of economic incentives on retirement.}, keywords = {health, Health and well-being, Health Behavior, Retirement, Retirement Decision}, doi = {10.3386/w19902}, url = {http://www.nber.org/papers/w19902}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {8012, title = {The Social Security Windfall Elimination and Government Pension Offset Provisions for Public Employees in the Health and Retirement Study}, journal = {Social Security Bulletin}, volume = {74}, year = {2014}, note = {Date revised - 2015-04-01 Availability - URL:http://www.ssa.gov/policy/docs/ssb/ Publisher{\textquoteright}s URL}, pages = {55-69}, publisher = {74}, abstract = {This article uses Health and Retirement Study data to investigate the effects of Social Security{\textquoteright}s Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) on Social Security benefits received by households. The provisions reduce benefits for individuals or the dependents of individuals whose work histories include jobs for which they were entitled to a pension and were not subject to Social Security payroll taxes ( noncovered employment). We find that about 3.5 percent of households are subject to either the WEP or the GPO, and that the provisions reduce the present value of their Social Security benefits by roughly one-fifth. Households affected by both provisions experience benefit reductions of about one-third. Under the WEP, the Social Security benefit reduction is capped at one-half of the amount of the pension from noncovered employment, which substantially reduces the WEP penalty and prevents the WEP adjustment from falling disproportionately on households in the lowest earnings category.}, keywords = {Employment and Labor Force, Income, Pensions, Public Policy, Retirement Planning and Satisfaction, Social Security}, author = {Alan L Gustman and Thomas L. Steinmeier and N. Tabatabai} } @article {5949, title = {Effects of Social Security Policies on Benefit Claiming, Retirement and Saving}, year = {2013}, institution = {Cambridge, MA, National Bureau of Economic Research}, abstract = {An enhanced version of a structural model jointly explains benefit claiming, wealth and retirement, including reversals from states of lesser to greater work. The model includes stochastic returns on assets. Estimated with Health and Retirement Study data, it does a better job of predicting claiming than previous versions. Alternative beliefs about the future of Social Security affect predicted outcomes. Effects of three potential policies are also examined: increasing the early entitlement age, increasing the full retirement age, and eliminating the payroll tax for seniors. Predicted responses to increasing the full entitlement age are sensitive to beliefs.}, keywords = {Consumption and Savings, Healthcare, Public Policy, Retirement Planning and Satisfaction, Social Security}, url = {http://www.nber.org/papers/w19071}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {7791, title = {Redistribution under the Social Security benefit formula at the individual and household levels, 1992 and 2004}, journal = {Journal of Pension Economics and Finance}, volume = {12}, year = {2013}, note = {Times Cited: 0}, pages = {1-27}, publisher = {12}, abstract = {Studies using data from the early 1990s suggested that while the progressive Social Security benefit formula succeeded in redistributing benefits from individuals with high earnings to individuals with low earnings, it was much less successful in redistributing benefits from households with high earnings to households with low earnings. Wives often earned much less than their husbands. As a result, much of the redistribution at the individual level was effectively from high earning husbands to their own lower earning wives. In addition, spouse and survivor benefits accrue disproportionately to women from high income households. Both factors mitigate redistribution at the household level. It has been argued that with the increase in the labor force participation and earnings of women, Social Security now should do a better job of redistributing benefits at the household level. To be sure, when we compare outcomes for a cohort with a household member age 51 to 56 in 1992 with those from a cohort born twelve years later, redistribution at the household level has increased over time. Nevertheless, as of 2004 there still is substantially less redistribution of benefits from high to low earning households than from high to low earning individuals.}, keywords = {Adult children, Income, Pensions, Social Security, Women and Minorities}, doi = {10.1017/s1474747212000108}, author = {Alan L Gustman and Thomas L. Steinmeier and N. Tabatabai} } @article {5960, title = {The Social Security Windfall Elimination and Government Pension Offset Provisions for Public Employees in the Health and Retirement Study}, year = {2013}, institution = {Ann Arbor, The University of Michigan}, abstract = {This paper uses data from the Health and Retirement Study to investigate the effects of Social Security s Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) provision on Social Security benefits received by individuals and households. WEP reduces the benefits of individuals who worked in jobs covered by Social Security and also worked in uncovered jobs where a pension was earned. WEP also reduces spouse benefits. GPO reduces spouse and survivor benefits for persons who worked in uncovered government employment where they also earned a pension. Unlike previous studies, we take explicit account of pensions earned on jobs not covered by Social Security, a key determinant of the size of WEP and GPO adjustments. Also unlike previous studies, we focus on the household. This allows us to incorporate the full effects of WEP and GPO on spouse and survivor benefits, and to evaluate the effects of WEP and GPO on the assets accumulated by affected families. Among our specific findings: About 3.5 percent of households are subject to either WEP or to GPO. The present value of their Social Security benefits is reduced by roughly one fifth. This amounts to five to six percent of the total wealth they accumulate before retirement. Households affected by both WEP and GPO lose about one third of their benefit. Limiting the Social Security benefit to half the size of the pension from uncovered employment reduces the penalty from WEP for members of the original HRS cohort by about 60 percent.}, keywords = {Public Policy, Retirement Planning and Satisfaction, Social Security}, url = {http://www.mrrc.isr.umich.edu/publications/papers/pdf/wp288.pdf}, author = {Alan L Gustman and Thomas L. Steinmeier and N. Tabatabai} } @article {5946, title = {Behavioral Effects of Social Security Policies on Benefit Claiming, Retirement and Saving}, number = {WP 2012-263}, year = {2012}, institution = {Michigan Retirement and Disability Research Center, University of Michigan}, address = {Ann Arbor, MI}, abstract = {This paper specifies three behavioral variants of a structural model of retirement and saving to bring predicted Social Security claiming rates closer to the rates observed in the data. The model, estimated with Health and Retirement Study data, is used to examine three potential policies: increasing early entitlement age, increasing normal retirement age, and eliminating payroll taxes after normal retirement age. Behavioral responses to increasing early entitlement age and eliminating the payroll tax are not affected by the behavioral variant used. Predicted effects of increasing the normal retirement age exhibit more sensitivity. Heterogeneity shapes the responses to these policy changes.}, keywords = {Public Policy, Retirement Planning and Satisfaction, Social Security}, url = {https://mrdrc.isr.umich.edu/pubs/behavioral-effects-of-social-security-policies-on-benefit-claiming-retirement-and-saving/}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {7729, title = {Financial Knowledge and Financial Literacy at the Household Level}, journal = {The American Economic Review}, volume = {102}, year = {2012}, pages = {309-313}, publisher = {102}, abstract = {There is evidence of a relation between numeracy and wealth held outside of pensions and Social Security. With pensions and Social Security accounting for half of wealth at retirement, and evidence that those with pensions save more in other forms, one would expect to find knowledge of pensions and Social Security influencing retirement saving. Yet we find no evidence that knowledge of pensions and Social Security is related to nonpension, non-Social Security wealth, to numeracy, or that it plays an intermediate role in the numeracy-wealth relation. Our findings raise questions about policies that would enhance numeracy to increase retirement saving. PUBLICATION ABSTRACT}, keywords = {Net Worth and Assets, Other, Public Policy, Retirement Planning and Satisfaction, Social Security}, doi = {10.1257/aer.102.3.309}, author = {Alan L Gustman and Thomas L. Steinmeier and N. Tabatabai} } @article {7736, title = {The growth in Social Security benefits among the retirement-age population from increases in the cap on covered earnings.}, journal = {Soc Secur Bull}, volume = {72}, year = {2012}, month = {2012}, pages = {49-61}, publisher = {72}, abstract = {

Analysts have proposed raising the maximum level of earnings subject to the Social Security payroll tax (the "tax max") to improve long-term Social Security Trust Fund solvency. This article investigates how raising the tax max leads to the "leakage" of portions of the additional revenue into higher benefit payments. Using Health and Retirement Study data matched to Social Security earnings records, we compare historical payroll tax payments and benefit amounts for Early Boomers (born 1948-1953) with tax and benefit simulations had they been subject to the tax max (adjusted for wage growth) faced by cohorts 12 and 24 years older. We find that 43.2 percent of the additional payroll tax revenue attributable to tax max increases affecting Early Boomers relative to taxes paid by the cohort 12 years older leaked into higher benefits. For Early Boomers relative to those 24 years older, we find 53.5 percent leakage.

}, keywords = {Aged, Cohort Studies, Female, Humans, Insurance Benefits, Male, Middle Aged, Models, Econometric, Public Policy, Salaries and Fringe Benefits, Social Security, Taxes, United States}, issn = {0037-7910}, url = {https://www.ssa.gov/policy/docs/ssb/v72n2/v72n2p49.html}, author = {Alan L Gustman and Thomas L. Steinmeier and N. Tabatabai} } @article {5939, title = {Mismeasurement of Pensions Before and After Retirement: The Mystery of the Disappearing Pensions with Implications for the Importance of Social Security as a Source of Retirement Support}, number = {WP 2012-268}, year = {2012}, institution = {Michigan Retirement and Disability Research Center, University of Michigan}, address = {Ann Arbor, MI}, abstract = {A review of the literature suggests that when pension values are measured by the wealth equivalent of promised DB pension benefits and DC balances for those approaching retirement, pensions account for more support in retirement than is suggested when their contribution is measured by incomes received directly from pension plans by those who have already retired. Estimates from the Health and Retirement Study (HRS) for respondents in their early fifties suggest that pension wealth is about 86 percent as valuable as Social Security wealth. In data from the Current Population Survey (CPS), for members of the same cohort, measured when they are 65 to 69, pension incomes are about 56 percent as valuable as incomes from Social Security. Our empirical analysis uses data from the Health and Retirement Study to examine the reasons for these differences in the contributions of pensions as measured in income and wealth data. A number of factors cause the contribution of pensions to be understated in retirement income data, especially data from the CPS. One factor is a difference in methodology between surveys affecting what is included in pension income, especially in the CPS, which ignores irregular payments from pensions. In CPS data on incomes of those ages 64 to 69 in 2006, pension values are 59 percent of the value of Social Security. For the same cohort, in HRS data, the pension value is 67 percent of the value of Social Security benefits. Some pension wealth disappears at retirement because respondents change their pension into other forms that are not counted as pension income in surveys of income. Altogether, 16 percent of pension wealth is transformed into some other form at the time of disposition. For those who had a defined benefit pension just before termination, the dominant plan type for current retirees, at termination 12 percent of the benefit was transformed into a state that would not count as pension income after retirement. For those who receive benefits soon after termination, there is a 3.5 percent reduction in DB pension value at termination compared to the year before termination. One reason may be the form of annuitization that is chosen. A series of caveats notwithstanding, the bottom line is that CPS data on pension incomes received in retirement understates the full contribution pensions make to supporting retirees.}, keywords = {Methodology, Net Worth and Assets, Pensions, Retirement Planning and Satisfaction}, url = {https://mrdrc.isr.umich.edu/pubs/mismeasurement-of-pensions-before-and-after-retirement-the-mystery-of-the-disappearing-pensions-with-implications-for-the-importance-of-social-security-as-a-source-of-retirement-support-2/}, author = {Alan L Gustman and Thomas L. Steinmeier and N. Tabatabai} } @article {5907, title = {The Effects of Changes in Women s Labor Market Attachment on Redistribution Under the Social Security Benefit Formula}, number = {WP 2011-248}, year = {2011}, institution = {Michigan Retirement and Disability Research Center, University of Michigan}, address = {Ann Arbor, MI}, abstract = {Studies using data from the early 1990s suggested that while the progressive Social Security benefit formula succeeded in redistributing benefits from individuals with high earnings to individuals with low earnings, it was much less successful in redistributing benefits from households with high earnings to households with low earnings. Wives often earned much less than their husbands. As a result, much of the redistribution at the individual level was effectively from high earning husbands to their own lower earning wives. In addition, spouse and survivor benefits accrue disproportionately to women from high income households. Both factors mitigate redistribution at the household level. This paper compares outcomes for the earlier cohort with those of a cohort born twelve years later. With greater growth in women{\textquoteright}s earnings, the aim of the study is to see whether, after the recent growth in two earner households, and the growth in women{\textquoteright}s labor market activity and earnings, the Social Security system now fosters somewhat more redistribution from high to low earning households. We use data from the Health and Retirement Study to study a population consisting of members of households with at least one person age 51 to 56 in either 1992 or in 2004. We use four different measures of redistribution: the ratio of the present value of benefits to taxes for households arrayed by decile of covered earnings; the fraction of total Social Security benefits redistributed from households with high earnings to those with low earnings; the share of total benefits paid to members of each cohort redistributed from households falling in the highest deciles of earners to those with lower covered earnings; and the rate of return to Social Security taxes for members with different amounts of covered earnings. Considering differences in earnings between cohorts, women enjoyed a more rapid growth of labor force participation, hours of work and covered earnings than men. This increased the redistribution of Social Security benefits among households. Nevertheless, a considerable gap remains between the labor market activities and earnings of women versus men. As a result, the Social Security system remains much less successful in redistributing benefits from households with high covered earnings to those with lower covered earnings than in redistributing benefits from individuals with high covered earnings to those with lower covered earnings.}, keywords = {Employment and Labor Force, Income, Pensions, Social Security, Women and Minorities}, url = {https://deepblue.lib.umich.edu/bitstream/handle/2027.42/86250/wp248.pdf?sequence=1}, author = {Alan L Gustman and Thomas L. Steinmeier and N. Tabatabai} } @article {5908, title = {How Did the Recession of 2007-2009 Affect the Wealth and Retirement of the Near Retirement Age Population in the Health and Retirement Study?}, number = {WP 2011-253}, year = {2011}, institution = {Michigan Retirement and Disability Research Center, University of Michigan}, address = {Ann Arbor, MI}, abstract = {This paper uses asset and labor market data from the Health and Retirement Study (HRS) to investigate how the recent Great Recession has affected the wealth and retirement of those in the population who were just approaching retirement age at the beginning of the recession, a potentially vulnerable segment of the working age population. The retirement wealth held by those ages 53 to 58 before the onset of the recession in 2006 declined by a relatively modest 2.8 percentage points by 2010. In more normal times, their wealth would have increased over these four years. Members of older cohorts accumulated an additional 5 percent of wealth over the same age span. To be sure, a part of that accumulation was the result of the upside of the housing bubble. The wealth holdings of poorer households were least affected by the recession. Relative losses are greatest for those who initially had the highest wealth when the recession began.The adverse labor market effects of the Great Recession are more modest. Although there is an increase in unemployment, that increase is not mirrored in the rate of flow out of full-time work or partial retirement. All told, the retirement behavior of the Early Boomer cohort looks similar, at least so far, to the behavior observed for members of older cohorts at comparable ages. Very few in the population nearing retirement age have experienced multiple adverse events. Although most of the loss in wealth is due to a fall in the net value of housing, because very few in this cohort have found their housing wealth under water, and housing is the one asset this cohort is not likely to cash in for another decade or two, there is time for their losses in housing wealth to recover.}, keywords = {Demographics, Employment and Labor Force, Net Worth and Assets, Public Policy, Retirement Planning and Satisfaction}, url = {https://mrdrc.isr.umich.edu/pubs/how-did-the-recession-of-2007-2009-affect-the-wealth-and-retirement-of-the-near-retirement-age-population-in-the-health-and-retirement-study-2/}, author = {Alan L Gustman and Thomas L. Steinmeier and N. Tabatabai} } @article {5808, title = {Financial Knowledge and Financial Literacy at the Household Level}, number = {16500}, year = {2010}, institution = {National Bureau of Economic Research}, address = {Cambridge, MA}, abstract = {This paper uses data from the Health and Retirement Study to explore the mechanism that underlies the robust relation found in the literature between cognitive ability, and in particular numeracy, and wealth, income constant. We have a number of findings. First, the more valuable the pension, the more knowledgeable are covered workers about their pensions. We suggest that causality is more likely to run from pension wealth to pension knowledge, rather than the other way around. Second, most measures of cognitive ability, including numeracy, are not significant determinants of pension and Social Security knowledge. Third, standardizing for incomes and other factors, a pension of higher value does not substitute for other forms of wealth. Rather, counting pensions in total wealth, those with more valuable pensions save more for retirement, other things the same. Fourth, there is no evidence that wealth held outside of pensions is influenced by knowledge of pensions. In sum, numeracy does not influence wealth in whole or in part by affecting financial knowledge of one{\textquoteright}s pension plan, where financial knowledge of the pension then influences other decisions about retirement saving. These findings raise questions about the mechanism that underlies the relation between cognition, especially numeracy, and wealth. From a policy perspective, they suggest that the numeracy-wealth relation should not be taken as evidence that increasing financial literacy will increase the wealth of households as they enter into retirement.}, keywords = {Health Conditions and Status, Net Worth and Assets, Other, Pensions}, doi = {10.3386/w16500}, author = {Alan L Gustman and Thomas L. Steinmeier and N. Tabatabai} } @article {5806, title = {The Growth in Social Security Benefits Among the Retirement Age Population from Increases in the Cap on Covered Earnings}, number = {16501}, year = {2010}, institution = {National Bureau of Economic Research}, address = {Cambridge, MA}, abstract = {This paper investigates how increases in the level of maximum earnings subject to the Social Security payroll tax have affected Social Security benefits and taxes. The analysis uses data from the Health and Retirement Study to ask how different the present value of own benefits and taxes would be for the cohort born from 1948 to 1953 (ages 51 to 56 in 2004) if they faced the lower cap on the payroll tax that faced those born 12 and 24 years earlier, but otherwise had the same earnings stream and faced the same benefit formula. We find that for those in the Early Boomer cohort of the Health and Retirement Study, ages 51 to 56 in 2004, that after adjusting for nominal wage growth, benefits were increased by 1.5 percent by the increase in the payroll tax ceiling compared to the cohort 12 years older, and by 3.7 percent over the benefits under the payroll tax ceiling for the cohort 24 years older. Tax receipts were increased by 5.3 and 10.6 percent over tax receipts that would have been collected under the tax ceilings that applied to the cohorts 12 and 24 years older respectively. About 22 percent of the additional tax revenues created by the increase in the payroll tax cap between the Early Boomer cohort and those 12 years older led to increased benefits. Similarly, about 27 percent of the additional tax revenues created by the increase in the payroll tax cap between the Early Boomer cohort and those 24 years older led to increase benefits. Results are also presented separately for men and women, for those in the top quartile of earners, and for those at the tax ceiling throughout their work lives.}, keywords = {Demographics, Public Policy, Social Security}, doi = {10.3386/w16501}, author = {Alan L Gustman and Thomas L. Steinmeier and Tabatabai, Nahid} } @book {5284, title = {Pensions in the Health and Retirement Study}, year = {2010}, publisher = {Harvard University Press}, organization = {Harvard University Press}, address = {Cambridge and London}, abstract = {Draws evidence from the National Institute on Aging{\textquoteright}s Health and Retirement Study to examine the pensions held by those approaching retirement age in the United States. Discusses theories explaining pensions; employment and retirement in the Health and Retirement Study; pension data in the Health and Retirement Study; pension plan participation in the Health and Retirement Study; pension plan type; imperfect knowledge of pension plan type; pension retirement ages; pension values; retirement incentives from defined benefit pensions; disposition of pensions upon leaving a job and pension incomes in retirement; and the changing role of pensions in total wealth.}, keywords = {Employment and Labor Force, Net Worth and Assets, Pensions, Retirement Planning and Satisfaction}, url = {https://www.hup.harvard.edu/catalog.php?isbn=9780674048669\&content=toc}, author = {Alan L Gustman and Thomas L. Steinmeier and N. Tabatabai} } @article {10270, title = {Policy Effects in Hyperbolic vs. Exponential Models of Consumption and Retirement}, journal = {National Bureau of Economic Research Working Paper Series}, volume = {No. 16503}, year = {2010}, note = {Author contact info:Alan L. GustmanDepartment of EconomicsDartmouth CollegeHanover, NH 03755-3514Tel: 603/646-2641Fax: 603/646-2122E-Mail: ALAN.L.GUSTMAN@DARTMOUTH.EDUThomas L. SteinmeierDepartment of EconomicsTexas Tech UniversityLubbock, TX 79409E-Mail: thomas.steinmeier@ttu.edu}, month = {2010}, abstract = {This paper constructs a structural retirement model with hyperbolic preferences and uses it to estimate the effect of several potential policy changes. Estimated effects of policies are compared under hyperbolic and standard exponential preferences. Sophisticated hyperbolic discounters may accumulate substantial amounts of wealth for retirement. We find it is frequently difficult to distinguish empirically between models with the two types of preferences on the basis of asset accumulation paths or consumption paths around the period of retirement. The simulations also suggest that, despite the much higher initial time preference rate, individuals with hyperbolic preferences may actually value a real annuity more than individuals with exponential preferences who have accumulated roughly equal amounts of assets. This appears to be especially true for individuals with relatively high time preference rates or who have low assets for whatever reason. This affects the tradeoff between current benefits and future benefits on which many of the retirement incentives of the Social Security system rest.Simulations involving increasing the early entitlement age and increasing the delayed retirement credit do not show a great deal of difference whether exponential or hyperbolic preferences are used, but simulations for eliminating the earnings test show a non-trivially greater effect when exponential preferences are used.}, keywords = {consumption, Exponential models, Policy, policy effects}, doi = {10.3386/w16503}, url = {http://www.nber.org/papers/w16503}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {7449, title = {What the Stock Market Decline Means for the Financial Security and Retirement Choices of the Near-Retirement Population}, journal = {Journal of Economic Perspectives}, volume = {24}, year = {2010}, note = {Journal Article}, pages = {161-82}, publisher = {24}, abstract = {This paper investigates the effect of the current recession on the retirement age population. Data from the Health and Retirement Study suggest that those approaching retirement age (early boomers ages 53 to 58 in 2006) have only 15.2 percent of their wealth in stocks, held directly or in defined contribution plans or IRAs. Their vulnerability to a stock market decline is limited by the high value of their Social Security wealth, which represents over a quarter of the total household wealth of the early boomers. In addition, their defined contribution plans remain immature, so their defined benefit plans represent sixty five percent of their pension wealth. Simulations with a structural retirement model suggest the stock market decline will lead the early boomers to postpone their retirement by only 1.5 months on average. Health and Retirement Study data also show that those approaching retirement are not likely to be greatly or immediately affected by the decline in housing prices. We end with a discussion of important difficulties facing those who would use labor market policies to increase the employment of older workers.}, keywords = {Consumption and Savings, Employment and Labor Force, Event History/Life Cycle, Net Worth and Assets, Other, Retirement Planning and Satisfaction}, doi = {10.1257/jep.24.1.161}, url = {URL:http://www.aeaweb.org/jep/ Publisher{\textquoteright}s URL}, author = {Alan L Gustman and Thomas L. Steinmeier and N. Tabatabai} } @article {7306, title = {How Changes in Social Security Affect Retirement Trends}, journal = {Research on Aging}, volume = {31}, year = {2009}, pages = {261}, publisher = {31}, abstract = {For married men, we find the conventional view of retirement trends that the long term trend to early retirement has been reversed -- is partially contradicted by recent data. Specifically, descriptive data collected from both the Census and the Health and Retirement Study (HRS) suggest that for those in their fifties, over the periods 1992 to 1998 and 1998 to 2004, the trend to early retirement reasserted itself and labor force participation fell. In contrast, for those in their sixties, there was an increase in work. Similarly, for those 65 and over, the amount of work increased. Simulations with a structural retirement model suggest that the recent acceleration of the trend to early retirement for those in their fifties is not the result of the change in Social Security rules. According to our model, changes in Social Security rules are expected to reduce the number of those in their early sixties who are working. This suggests that forces other than changing Social Security rules account for the observed increase in work by those in their early sixties, and that the effects of these forces are stronger than those suggested by the trends in descriptive data. Lastly, the analysis suggests that changing Social Security rules do help to explain the increase in work by those age 65 and older. The effects of these rule changes encourage workers to remain in their long term jobs for a longer time, encourage some to return from retirement to full time work, and encourage more partial retirement. Nevertheless, the changes in retirement induced by Social Security changes have been modest. Due to Social Security changes, the number of 65 year old married men at work increases by about two percentage points at ages 65 and 66, with slightly smaller changes at 67 to 69. Given the low basic labor force participation at 65 and 66, with 20 to 25 percent at full time work, and another 17 percent at part time work, the percentage increases in work due to Social Security changes are three or four times higher.}, keywords = {Employment and Labor Force, Retirement Planning and Satisfaction, Social Security}, doi = {https://doi.org/10.1177/0164027508328312}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {5754, title = {Integrating Retirement Models}, number = {15607}, year = {2009}, institution = {National Bureau of Economic Research}, address = {Cambridge, MA}, abstract = {This paper advances the specification and estimation of models of retirement and saving in two earner families. The complications introduced by the interaction of retirement decisions by husbands and wives have led researchers to adopt a number of simplifications to increase the feasibility of estimating family retirement models. Our model relaxes these restrictions. It includes the extended choice set created when each spouse makes an independent retirement decision. It also includes the full range of complexity found in dynamic-stochastic models of retirement decision making, so far analyzed only in the context of single earner households. Retirement outcomes include full retirement, partial retirement and full-time work. Reverse flows from states of lesser to greater work are also included. The preference structure incorporates heterogeneity in time preference, varying taste parameters for full-time and part-time work, and the possibility of changes in preferences after retirement. The opportunity set reflects the full range of nonlinearities created by pensions and Social Security. Financial returns are stochastic. Exogenous shocks such as layoffs are also included. Estimation is based on data from the Health and Retirement Study. The solution method is based on backward induction. We show that this method is superior to a method based on a Nash equilibrium, providing plausible behavioral predictions when Nash equilibrium criteria fall silent. In contrast to some recent studies, the findings suggest the flow of wives into the labor force in the last few decades has probably reduced the amount of husbands work. The model also provides plausible responses to various policies. For example, we find that any effort to promote opportunities for partial retirement as a means to increase overall work is likely to be unsuccessful as any induced decline in full retirements is offset by a decrease in full-time work.}, keywords = {Adult children, Methodology, Retirement Planning and Satisfaction}, doi = {10.3386/w15607}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {5750, title = {What the Stock Market Decline Means for the Financial Security and Retirement Choices of the Near-Retirement Population}, number = {15435}, year = {2009}, institution = {National Bureau of Economic Research }, address = {Cambridge, MA}, abstract = {This paper investigates the effect of the current recession on the near-retirement age population. Data from the Health and Retirement Study suggest that those approaching retirement age (early boomers ages 53 to 58 in 2006) have only 15.2 percent of their wealth in stocks, held directly or in defined contribution plans or IRAs. Their vulnerability to a stock market decline is limited by the high value of their Social Security wealth, which represents over a quarter of the total household wealth of the early boomers. In addition, their defined contribution plans remain immature, so their defined benefit plans represent sixty five percent of their pension wealth. Simulations with a structural retirement model suggest the stock market decline will lead the early boomers to postpone their retirement by only 1.5 months on average. Health and Retirement Study data also show that those approaching retirement are not likely to be greatly or immediately affected by the decline in housing prices. We end with a discussion of important difficulties facing those who would use labor market policies to increase the employment of older workers.}, keywords = {Consumption and Savings, Net Worth and Assets, Social Security}, doi = {10.3386/w15435}, author = {Alan L Gustman and Thomas L. Steinmeier and N. Tabatabai} } @article {10271, title = {How Does Modeling of Retirement Decisions at the Family Level Affect Estimates of the Impact of Social Security Policies on Retirement?}, number = {No. 2008-179}, year = {2008}, month = {10/2008}, institution = {Michigan Retirement Research Center}, address = {Ann Arbor, MI}, abstract = {This paper applies structural models of retirement and saving of two earner couples to explore the effects on retirement of two actuarially neutral policies, which we know from previous work can have a substantial effect on retirement if heterogeneity in time preference rates is allowed. The main question being investigated here is whether using a model that explicitly incorporates the retirement interactions of two working spouses yields a different evaluation of policies than when a much simpler model that treats the retirement decisions of the second spouse as exogenous is used. The findings indicate that unless the question of interest is specifically related to joint retirement issues, the effects of the two actuarially neutral policies being investigated are roughly equal whichever model is estimated. A second question explored in the paper is whether two earner and one earner households can be combined in the analysis. The effects of policy changes are clearly different for one earner and two earner households, but there is some evidence that the principal difference is due to the differing budget sets of the two groups. Though the estimated preference parameters are significantly different, the critical parameters governing responses to policy changes are similar. As a result, it seems plausible that unless the question being investigated involves looking at these two groups separately, the overall impact of the policy changes may be adequately assessed by combining the two groups, separately identifying them by a dummy variable. A third question involves the magnitude of the effects for these two specific policy changes. Increasing the Social Security early entitlement age from 62 to 64 would reduce the level of retirement for husbands from two earner households by 4.4-4.6 percentage points at age 62, and by 5.1-5.7 percentage points for wives. In contrast, this policy change would induce husbands from one earner households to reduce the level of retirement by 10.2 percentage points at age 62. In a system of personal accounts, offering Social Security benefits as a lump sum instead of as an annuity would increase the level of retirement for husbands from two earner households by 7.1-8.1 percentage points at age 62 and by 8.9 percentage points for husbands in one earner households, and by 2.8-3.2 percentage points for wives in two earner households.}, keywords = {modeling, Policy, Retirement, Social Security}, url = {https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1287302}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {5701, title = {Imperfect Knowledge of Pension Plan Type}, number = {13379}, year = {2007}, institution = {National Bureau of Economic Research }, address = {Cambridge, MA}, abstract = {This paper investigates the reasons for discrepancies between the pension plan type reported by respondents to the Health and Retirement Study (HRS) and pension plan type obtained from documents produced by their employers, called Summary Plan Descriptions (SPDs). The analysis suggests the discrepancies are sizable and are mainly due to misreports by respondents. Discrepancies between respondent and firm reports of plan type are first documented for different years and from different data sources. Changes over time in respondent and firm reports are analyzed for those who say their plans did not change. Plan type from payroll data produced by Watson Wyatt, a pension consulting company, is examined and compared to respondent reports for employees covered by Watson Wyatt plans. The Watson Wyatt payroll data report plan type without error, and yet we find the patterns of discrepancies between respondent and firm provided data are the same as for the HRS employer and respondent data. We also explore other evidence gathered by the HRS in the course of interviews and various experiments. Our findings that errors are mainly the result of misreporting by respondents, together with findings from experiments, suggest a number of changes in survey design that can help to reduce reporting error. They also suggest that models of retirement and saving behavior should allow for imperfect knowledge by decision makers.}, keywords = {Methodology, Pensions}, doi = {DOI 10.3386/w13379}, author = {Alan L Gustman and Thomas L. Steinmeier and N. Tabatabai} } @article {5694, title = {Projecting Behavioral Responses to the Next Generation of Retirement Policies}, number = {UM05-02}, year = {2007}, institution = {Michigan Retirement and Disability Research Center, University of Michigan}, address = {Ann Arbor, MI}, abstract = {This paper examines retirement and related behavioral responses to policies that on average are actuarially neutral. Many conventional models predict that actuarially neutral policies will not affect retirement behavior. In contrast, our model allows those with high time preference rates to find that the promise of an actuarially fair increase in future rewards does not balance the loss from foregone current benefits. Using data from the Health and Retirement Study, we find that from age 62 through full retirement age, the earnings test reduces full-time work by married men by about four percentage points, or by about ten percent of married men at full-time work. Abolishing the requirements on many jobs that an individual work full-time or not at all, what we term a minimum hours constraint on employment, would induce more than twice as many people to enter partial retirement as would leave full-time work, so that total full-time equivalent (FTE) employment would increase, although by a modest amount. If all benefits from personal accounts could be taken as a lump sum, the fraction not retired at age 62 would fall by about 5 percentage points compared to a system where there is mandatory annuitization of benefits.}, keywords = {Employment and Labor Force, Net Worth and Assets, Retirement Planning and Satisfaction}, url = {https://mrdrc.isr.umich.edu/pubs/projecting-behavioral-responses-to-the-next-generation-of-retirement-policies/}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {10272, title = {Financial Risk, Retirement, Saving and Investment.}, number = {Project $\#$: UM06-12}, year = {2006}, month = {09/2006}, institution = {Michigan Retirement and Research Center}, address = {Ann Arbor, MI}, abstract = { This paper considers the prospects for adding choice of portfolio composition to a life cycle model of retirement and saving, while preserving the ability of the model to continue to explain the course of saving and retirement. If eventually successful, such a modification might be used to improve understanding of retirement and saving behavior both under the current Social Security system, and under variations involving personal accounts. In particular we consider the implications of separating parameters that now reflect both risk aversion and time preference}, keywords = {Economics, financial risk, Investments, Retirement}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {6997, title = {Imperfect Knowledge of Social Security and Pensions}, journal = {Industrial Relations}, volume = {44}, year = {2005}, pages = {373-397}, publisher = {44}, abstract = {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.}, keywords = {Education, Pensions, Social Security}, doi = {https://doi.org/10.1111/j.0019-8676.2005.00389.x}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {RePEc:ntj:journl:v:58:y:2005:i:1:p:27-49, title = {Retirement Effects of Proposals by the President{\textquoteright}s Commission to Strengthen Social Security}, journal = {National Tax Journal}, volume = {58}, year = {2005}, month = {March}, pages = {27-49}, abstract = {The effects on retirement of proposals by the President{\textquoteright}s Commission to Strengthen Social Security are simulated using an econometric model of retirement and saving. In the absence of any policy reforms, and holding other market adjustments constant, increases in real wages are predicted to increase retirement from full time work at age 62 by 8.7 percentage points over the next 70 years. However, two leading proposals put forth by the Commission, model 2 and model 3, will offset almost half this trend, reducing retirement from full{\textendash}time work at age 62 by roughly five and three percentage points, respectively.}, keywords = {Retirement, Social Security}, url = {https://papers.ssrn.com/sol3/papers.cfm?abstract_id=701296}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {5634, title = {Retirement, Saving, Benefit Claiming and Solvency Under a Partial System of Voluntary Personal Accounts}, year = {2005}, institution = {Michigan Retirement Research Center, University of Michigan}, address = {Ann Arbor, MI}, abstract = {This paper is based on a structural model of retirement and saving, estimated with data for a sample of married men in the Health and Retirement Study. The model simulates how various features of a system of personal Social Security accounts jointly affects retirement, saving, the choice of whether benefits are taken as an annuity or lump sum, taxes paid and the course of benefits with age. Among our findings: Under a system of partial personal accounts, the fraction of 62 year olds at full time work would decline by about 22 percent compared to retirements under the current benefit formula. If the current system were replaced completely by personal accounts, the fraction at full time work would decline by about a third. If all benefits from personal accounts could be taken as a lump sum, the fraction not retired at age 62 would fall by about 5 percentage points compared to a system where there is mandatory annuitization of benefits. Unless annuitization is mandatory, there would be substantial diversion of benefits to age 62, reducing benefits received in one s 70s and 80s by 20 percent or more.}, keywords = {Consumption and Savings, Net Worth and Assets, Social Security}, url = {https://mrdrc.isr.umich.edu/pubs/retirement-saving-benefit-claiming-and-solvency-under-a-partial-system-of-voluntary-personal-accounts-2/}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {5658, title = {Social Security and Retirement Dynamics}, number = {UM05-05}, year = {2005}, institution = {The University of Michigan, Michigan Retirement Research Center}, address = {Ann Arbor, MI}, abstract = {This paper is based on a structural model of retirement and saving, estimated with data for a sample of married men in the Health and Retirement Study. It explains the relation of specific features of Social Security -- the benefit amount, the early entitlement age, the normal retirement age, earnings test parameters, and the delayed retirement credit -- to the full range of retirement outcomes -- continued work on the main job, full time work outside the main job after a period of partial or full retirement, as well as partial retirement and full retirement. The project also estimates the relation of Social Security to the flows among these states. We consider not only the effect of Social Security on movement from states of greater to lesser work, the probability of either moving from full time work to partial retirement or directly to full retirement, or from partial retirement to full retirement, but the reverse flows from states of lesser work to states of greater work. The largest effects of the policies examined are from increasing the early entitlement age from 62 to 64 and reducing benefits to 75 percent of their promised levels, the approximate amount benefits would have to be reduced when the trust fund runs out if there are no changes in funding. With the older early entitlement age, about 5 percent more of the population continues to work full time at their main job at 62 and 63 than would otherwise. In addition, another 4.5 percent of the male population works full time after having retired, as does another 4 percent at age 63. Partial retirement is reduced at ages 62 and 63 by about 3 percentage points when the early entitlement age is 64. Overall, complete retirements are about 6 percentage points lower at 62 and 63 when the early retirement age is higher. From age 64 on, the percent completely retired is about two percentage points lower in each year when the early entitlement age is 64 rather than 62. The effects of reducing promised Social Security benefits by about a quarter are also large. The probability of remaining on the main job is higher for those in their sixties, with the difference ranging from 3 to 5 percentage points for those ages 62 and older. At each year of age, an additional 1 percentage point will be in full time work after having retired. There is little difference in the fraction partially retired, so the probability of being fully retired is reduced by 4 to 6 percentage points when benefits are reduced by a quarter.}, keywords = {Consumption and Savings, Social Security}, url = {https://mrdrc.isr.umich.edu/projects/social-security-and-retirement-dynamics/}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {6990, title = {The Social Security Early Entitlement Age In A Structural Model of Retirement and Wealth}, journal = {Journal of Public Economics}, volume = {89}, year = {2005}, note = {RDA 1996-005}, pages = {441-463}, publisher = {89}, abstract = {A structural life cycle model of retirement and wealth attributes retirement peaks at both ages 62 and 65 to Social Security rules and wide heterogeneity in time preferences. Those with high discount rates often retire at 62. They have few assets and heavily value lost benefits from working after 62, largely ignoring potential increases in later benefits. Declining actuarial adjustments beginning at 65 induce those with low discount rates to retire at 65. Raising the Social Security early entitlement age to 64 induces 5 of the population to delay retiring, shifting the retirement spike from 62 to 64.}, keywords = {Methodology, Net Worth and Assets}, doi = {https://doi.org/10.1016/j.jpubeco.2004.03.007}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {5609, title = {Minimum Hours Constraints, Job Requirements and Retirement}, number = {10876}, year = {2004}, note = {ProCite field 3 : Unlisted; Unlisted}, institution = {The National Bureau of Economic Research}, address = {Cambridge, MA}, abstract = {A structural retirement model estimated with data from the Health and Retirement Study is used to simulate the effects of policies firms might adopt to improve employment conditions for older workers and thereby encourage delayed retirement. Firm policies that effectively abolished minimum hours constraints would strongly increase the number partially retired, while reducing full time work and full retirement, resulting in only a small net increase in full time equivalent employment. Reducing physical and mental requirements of jobs would have much weaker effects on retirement than was suggested by work with the 1970s Retirement History Study. Reducing informal pressures to retire, increasing employer accommodations to health problems, and reducing the prevalence of layoffs and retirement windows would have only small effects on retirement outcomes.}, keywords = {Consumption and Savings, Disabilities, Employment and Labor Force, Pensions, Public Policy, Retirement Planning and Satisfaction, Social Security}, doi = {10.3386/w10876}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {5610, title = {Personal Accounts and Family Retirement}, number = {10305}, year = {2004}, institution = {The National Bureau of Economic Research}, address = {Cambridge, MA}, abstract = {This paper constructs a model of retirement and saving by two earner couples. The model includes three dimensions of behavior: the joint determination of retirement and saving; heterogeneity in time preference; and the interdependence of retirement decisions of husbands and wives. Estimation is based on panel data from the Health and Retirement Study covering the period 1992 to 2000. When husbands postpone their retirement so they can retire together with their typically younger wives, the spike in retirement at age 62 is smeared to later ages. Thus retirements differ between one and two earner families. We find both an asymmetry in which husbands prefer their wife to be retired before they retire, and a clear distaste of many husbands to retiring when their wives are in poor health, while the wives are willing to stay at home with sickly husbands. We simulate a system of personal Social Security accounts based on a 10.6 percent contribution rate over the lifetime. One version allows individuals to make lump sum withdrawals at retirement instead of annuitizing. This program would increase the retirement rates of husbands at age 62 by about 15 percentage points compared to the current system. Adding a lump sum option, by itself, would increase retirements at 62 by about 6 percentage points.}, keywords = {Public Policy, Retirement Planning and Satisfaction, Social Security}, doi = {10.3386/w10305}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {6906, title = {Social Security, Pensions and Retirement Behaviour Within the Family}, journal = {Journal of Applied Econometrics}, volume = {19}, year = {2004}, note = {RDA 1996-005; HRS 1992}, pages = {723-737}, publisher = {19}, abstract = {This paper estimates a structural model of family retirement using US data from the Health and Retirement Study (HRS). It provides further insight into household retirement decision making and the reasons for interdependence in the retirement decisions of each spouse. Improvements in HRS data and matched employer provided pension histories allow more precise identification of key parameters governing interdependent behaviour within the household. In an earlier study we found that interdependence was due to preferences rather than coordination of retirement incentives in the budget, and in particular that it is not a correlation in preferences, but the appearance of the spouse{\textquoteright}s retirement status in the husband{\textquoteright}s and wife{\textquoteright}s utility function that is largely responsible for coordination of retirement between spouses. We now find that a measure of how much each spouse values being able to spend time in retirement with the other accounts for a good portion of that apparent interdependence. For the wife, the husband{\textquoteright}s retirement status influences her retirement decision only if she values spending time in retirement with her husband. For husbands, the effect of having the wife already retired on his retirement decision is roughly doubled if he enjoys spending time in retirement with his wife, but there is some effect even if he does not. This is consistent with our earlier findings that the husband is more influenced by having a retired spouse than the wife is. The increase in the extent of the dependence of the wife{\textquoteright}s labour supply on the husband{\textquoteright}s retirement from our past work probably is traceable to better measurement of the opportunity set facing the husband in HRS data. Once estimated, we use the model to investigate the labour supply effects of alternative social security policies, examining the effect of dividing credit for earnings evenly between spouses, or of basing social security benefits on the amounts accumulated in private accounts. Both policies change the relative importance of spouse and survivor social security benefits within the household and both raise the relative reward to work later in the life cycle. The incentives created are modest, and retirement responds accordingly. Nevertheless, at some ages, such as 65, there may be as much as a 6 increase in the old age work force under privatized accounts. Copyright 2004 John Wiley and Sons, Ltd.}, keywords = {Adult children, Pensions, Retirement Planning and Satisfaction, Social Security}, doi = {https://doi.org/10.1002/jae.753}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {RePEc:mrr:papers:wp082, title = {Understanding Patterns of Social Security Benefit Receipt, Pensions Incomes, Retirement and Saving by Race, Ethnicity, Gender and Marital Status: A Structural Approach}, number = {UM30-13}, year = {2004}, institution = {Michigan Retirement Research Center}, address = {Ann Arbor, MI}, abstract = {In this paper we use data from the Health and Retirement Study to examine differences in retirement behavior, wealth, Social Security and pension benefits by race and gender. The differences observed among groups are sometimes substantial. We then estimate models jointly explaining retirement and wealth by race and gender. We decompose differences in outcomes into those due to differences in parameters of the preference function for leisure and goods, time preference rates, and those due to differences in the circumstances of the members of each group. By circumstances we mean both the opportunity set, and factors that determine the disutility of continued work, such as health status. We find that differences in outcomes among white, black and Hispanic males are not due to differences in preferences for leisure and goods consumption, but are due both to differences in time preference and to differences in circumstances. Differences in outcomes between men and women are primarily due to differences in preferences. Authors{\textquoteright} Acknowledgement This paper was supported by a grant from the U.S. Social Security Administration (SSA) to the Michigan Retirement Research Center, UM 03-13. The opinions and conclusions are solely those of the authors and should not be construed as representing the opinions or policy of SSA, the Michigan Retirement Research Center, or the National Bureau of Economic Research. Alan L. Gustman is Loren Berry Professor of Economics at Dartmouth College, Department of Economics, Hanover, N.H. 03755 (alan.l.gustman@dartmouth.edu). Thomas L. Steinmeier is Professor of Economics, Texas Tech University, Department of Economics, Lubbock, Texas 79409 (Thomas.Steinmeier@TTU.edu).}, keywords = {ethnicity, gender, pension incomes, race, Retirement, Social Security, Social Security Benefits}, url = {https://mrdrc.isr.umich.edu/projects/understanding-patterns-of-social-security-benefit-receipt-pensions-incomes-retirement-and-saving-by-race-ethnicity-gender-and-marital-status-a-structured-approach/}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {10274, title = {Retirement Effects of Proposals by the President{\textquoteright}s Commision to Strengthen Social Security}, volume = {No. 10030}, number = {10030}, year = {2003}, note = {Author contact info:Alan L. GustmanDepartment of EconomicsDartmouth CollegeHanover, NH 03755-3514Tel: 603/646-2641Fax: 603/646-2122E-Mail: ALAN.L.GUSTMAN@DARTMOUTH.EDUThomas L. SteinmeierDepartment of EconomicsTexas Tech UniversityLubbock, TX 79409E-Mail: thomas.steinmeier@ttu.edu}, institution = {The National Bureau of Economic Research}, address = {Cambridge, MA}, abstract = {A structural dynamic model of retirement and saving is used to simulate the retirement effects of proposals made by the President{\textquoteright}s Commission to Strengthen Social Security. Provisions reducing the growth in real benefits and increasing actuarial incentives to work reduce retirements. They more than offset increases in retirements caused by individual accounts, increased benefits for low wage workers and survivors, and reductions in the top AIME bracket. By 2075, the Commission{\textquoteright}s proposals would reduce retirements at age 62 by roughly 4 percentage points, mitigating an 8.7 percentage point trend to earlier retirement projected to reassert itself after its recent interruption.}, keywords = {Retirement, Social Security}, url = {http://www.nber.org/papers/w10030}, author = {Alan L Gustman and Thomas L. Steinmeier} } @inbook {5132, title = {What People Don{\textquoteright}t Know About Their Pensions and Social Security: An Analysis Using Linked Data from the Health and Retirement Study}, booktitle = {Public Policies and Private Pensions}, year = {2003}, note = {RDA 1996-005ProCite field[8]: eds.}, pages = {57-125}, publisher = {Brookings Institution}, organization = {Brookings Institution}, address = {Washington, DC}, abstract = {Pension plan descriptions from respondents to the 1992 Health and Retirement Study are compared with descriptions obtained from their employers. Earnings histories reported by respondents are compared with earnings histories from the Social Security Administration. The probability of linking employer pension data, which is two thirds for current jobs, and of obtaining permission to link an earnings history, which is over 70 percent, are not well explained by respondent characteristics. Half of respondents with linked pension data correctly identify plan type, and fewer than half identify, within one year, dates of eligibility for early and normal retirement benefits. Benefit reduction rates are essentially not reported. Respondents do better in reporting pension values, but the unexplained variation is still considerable. In contrast, respondent reported values together with other observables, account for 80 percent of the variation in pension values and 75 percent of the variation in covered earnings measured from linked records. Thus prospects are good for imputing plan values, but not for imputing the location or size of early retirement incentives. Our findings raise questions about how well respondents understand complex pension and Social Security rules.}, keywords = {Consumption and Savings, Employment and Labor Force, Income, Pensions, Retirement Planning and Satisfaction, Social Security}, url = {https://www.nber.org/papers/w7368}, author = {Alan L Gustman and Thomas L. Steinmeier}, editor = {William G. Gale and John B. Shoven and Mark J. Warshawsky} } @article {6817, title = {The Influence of Pensions on Behavior: How Much Do We Really Know?}, journal = {TIAA-CREF Research Dialog}, volume = {71}, year = {2002}, publisher = {71}, abstract = {Economists have developed models to explain the impact of pensions and Social Security on various outcomes, such as retirement, worker turnover, and saving. However, some recent research has raised questions about these conventional models. This issue of Research Dialogue summarizes findings from our ongoing research on pensions and Social Security. Using data from the new longitudinal Health and Retirement Study that reports both the respondents{\textquoteright} own knowledge about their pensions and the actual provisions of their pension plans, our research emphasizes how well the conventional model does in describing behavior, answers some of the questions raised by others, and raises some new questions. We also discuss the implications of our findings for researchers and policy makers.}, keywords = {Pensions, Retirement Planning and Satisfaction}, doi = {http://dx.doi.org/10.2139/ssrn.308565}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {5507, title = {Retirement and the Stock Market Bubble}, number = {9404}, year = {2002}, note = {RDA}, institution = {The National Bureau of Economic Research }, address = {Cambridge, MA}, abstract = {This paper specifies and estimates a structural dynamic stochastic model of the way individuals make retirement and saving choices in an uncertain world, and applies that model to analyze the effects of the stock market bubble on retirement behavior. The model includes individual variation both in retirement preferences and in time preferences. Estimates are based on information covering the period 1992 through 2000 from the Health and Retirement Study (HRS), a panel survey of retirement age respondents and their spouses. The extraordinary returns in the stock market in the late 1990{\textquoteright}s, which more than doubled stock prices and unexpectedly increased the value of a mixed portfolio by nearly 60 percent, increased retirement for the HRS sample of workers by over 3 percentage points by the turn of the century and would have decreased the average retirement age by about a quarter of a year if it had not been interrupted. The subsequent decline in the market, which very nearly wiped out the gains that had been made during the preceding surge, effectively neutralized the effect of the preceding stock market gains on retirement. The effects of the bubble were to increase retirement as long as the bubble continued, but any continuing effects of the bubble after its end will probably be minimal.}, keywords = {Consumption and Savings, Net Worth and Assets, Retirement Planning and Satisfaction}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {6757, title = {How Effective is Redistribution Under the Social Security Benefit Formula?}, journal = {Journal of Public Economics}, volume = {82}, year = {2001}, note = {RDA 1996-005}, pages = {1-28}, publisher = {82}, abstract = {In this study, data from the Health and Retirement Study linked to the Social Security Administration is used in order to analyze wealth redistribution by way of Social Security. This redistribution seems to go from the upper earners to the lower earners. More specifically, the wealth is being redistributed from men to women and, when looking at the household context, from primary earners to secondary earners. The study also illustrates wealth redistribution when specific factors are taken into account and show how much of an effect different variables have on the redistribution of wealth. From their analysis the authors conclude that privatizing the Social Security system would have no effect on redistribution of wealth.}, keywords = {Consumption and Savings, Income, Retirement Planning and Satisfaction, Social Security}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {5457, title = {Imperfect Knowledge, Retirement and Saving}, number = {8406}, year = {2001}, note = {RDA 1996-005}, institution = {NBER}, address = {Cambridge, MA}, keywords = {Pensions, Retirement Planning and Satisfaction}, url = {https://www.nber.org/papers/w8406}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {6760, title = {Retirement and Wealth}, journal = {Social Security Bulletin}, volume = {64}, year = {2001}, note = {RDA 1996-005; Revision of NBER WP 8229}, publisher = {64}, abstract = {This article analyzes the relationship between retirement and wealth. Using data from the first four waves of the longitudinal Health and Retirement Study{\textemdash}a cohort of individuals born from 1931 to 1941{\textemdash}we estimate reducedform retirement and wealth equations. Our results show that those who retire earlier do not necessarily save more and that even if one{\textquoteright}s primary interest is in the relationship between Social Security policy and the decision to retire, it is important to incorporate saving behavior and other key decisions into the analysis.}, keywords = {Net Worth and Assets, Retirement Planning and Satisfaction}, url = {https://www.ssa.gov/policy/docs/ssb/v64n2/v64n2p66.pdf}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {6696, title = {Employer Provided Pension Data in the NLS Mature Women{\textquoteright}s Survey and in the Health and Retirement Study}, journal = {Research in Labor Economics}, volume = {19}, year = {2000}, note = {RDA 1996-005}, pages = {215-252}, publisher = {19}, keywords = {Consumption and Savings, Employment and Labor Force, Income, Methodology, Net Worth and Assets, Pensions, Retirement Planning and Satisfaction}, author = {Alan L Gustman and Thomas L. Steinmeier} } @inbook {5144, title = {Evaluating Pension Entitlements}, booktitle = {Forecasting Retirement Needs and Retirement Wealth}, year = {2000}, note = {RDA 1996-005; Revision of Pension Research Council Working Paper 98-20 ProCite field 8 : eds.}, pages = {309-326}, publisher = {University of Pennsylvania Press}, organization = {University of Pennsylvania Press}, chapter = {12}, address = {Philadelphia}, keywords = {Net Worth and Assets, Pensions, Public Policy}, url = {https://pensionresearchcouncil.wharton.upenn.edu/publications/books/forecasting-retirement-needs-and-retirement-wealth/}, author = {Alan L Gustman and Olivia S. Mitchell and Andrew A. Samwick and Thomas L. Steinmeier}, editor = {Olivia S. Mitchell and Hammond, B. and Rappaport, A.} } @article {5402, title = {How Effective is Redistribution Under the Social Security Benefit Formula?}, number = {7597}, year = {2000}, institution = {National Bureau of Economic Research}, address = {Cambridge, MA}, abstract = {This paper uses earnings histories obtained from the Social Security Administration and linked to the survey responses for participants in the Health and Retirement Study to investigate redistribution under the current social security benefit formula. When individuals are arrayed by indexed lifetime earnings, benefits are significantly redistributed from those with high lifetime earnings to those with low lifetime earnings. However, much of this apparent redistribution is from men to women, and when examined at the level of the family, from primary to secondary earners. When families are arrayed according the total lifetime earnings, and spouse and survivor benefits are taken into account, the extent of redistribution from families with high lifetime earnings to families with low lifetime earnings is roughly halved. When families are arrayed by their earnings potential, i.e., earnings during years when both spouses are engaged in substantial work, there is very little redistribution from families with high to low earnings capacity. Accordingly, at least for families on the verge of retirement day, introducing a system that ignored issues of redistribution would have no major effect on the distribution of social security benefits net of taxes among families with different earnings capacities.}, keywords = {Consumption and Savings, Income, Retirement Planning and Satisfaction, Social Security}, url = {https://www.nber.org/papers/w7597$\#$:~:text=When\%20families\%20are\%20arrayed\%20according,lifetime\%20earnings\%20is\%20roughly\%20halved.}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {6695, title = {Pensions and Retiree Health Benefits In Household Wealth: Changes From 1969 to 1992}, journal = {Journal of Human Resources}, volume = {35}, year = {2000}, note = {RDA 1996-005}, pages = {30-50}, publisher = {35}, keywords = {Medicare/Medicaid/Health Insurance, Net Worth and Assets, Pensions}, doi = {10.2307/146355}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {6681, title = {Retirement Outcomes in the Health and Retirement Study}, journal = {Social Security Bulletin}, volume = {63}, year = {2000}, note = {ProCite field 3 : Dartmouth College; TX Tech U}, pages = {57-71}, publisher = {63}, abstract = {This study examines retirement outcomes in the first four waves of the 1992 -98 Health and Retirement Study (HRS). The article compares outcomes under alternative definitions of retirement, describes differences in outcomes among demographic groups, compares retirement dynamics based on self-reported retirement status, and compares retirement flows in the 1990s and 1970s and between cohorts of the HRS. Among other findings, measured retirement is seen to differ, sometimes substantially, with the definition of retirement used and among the various groups analyzed.}, keywords = {Consumption and Savings, Demographics, Retirement Planning and Satisfaction, Social Security}, url = {https://www.ssa.gov/policy/docs/ssb/v63n4/v63n4p57.pdf}, author = {Alan L Gustman and Thomas L. Steinmeier} } @inbook {5156, title = {Social Security Benefits of Immigrants and U.S. Born}, booktitle = {Issues in the Economics of Immigration}, year = {2000}, note = {RDA 1996-005 ProCite field 8 : ed.}, pages = {309-350}, publisher = {University of Chicago Press}, organization = {University of Chicago Press}, abstract = {Immigrants realize higher Social Security benefits per year worked in the U.S. then U.S. born, even when earnings are identical in all years the immigrant has been in the U.S. The benefit formula favors those with low lifetime covered earnings, and the years prior to immigration are treated as years of zero earnings. If instead earnings were averaged only over years of residence in the U.S., and benefits were prorated based on the share of a 35 or 40 year base period spent in residence, immigrants would receive the same return on their social security taxes as U.S. born. For a sample from the Health and Retirement Study, a group born between 1931 and 1941, prorating reduces immigrants{\textquoteright} social security benefits by 7 to 15 percent. For immigrants who entered in the 1980{\textquoteright}s, the reductions would be over 30 percent. Prorating would reduce the present value of benefit payments to immigrants born from 1932 to 1941 by 7.5 billion to 15 billion. Most immigrants will still pay slightly more in taxes than they will receive in benefits. Taxes received from immigrants who subsequently emigrate without collecting benefits tip the balance in favor of including immigrants.}, keywords = {Consumption and Savings, Demographics, Employment and Labor Force, Pensions, Public Policy, Retirement Planning and Satisfaction, Social Security}, doi = {10.3386/w6478}, author = {Alan L Gustman and Thomas L. Steinmeier}, editor = {Borjas, George} } @article {6654, title = {Changing Pensions in Cross-Section and Panel Data: Analysis with Employer Provided Plan Descriptions}, journal = {Proceedings, National Tax Association}, volume = {Nov. 8-10, 1998}, year = {1999}, pages = {371-377}, publisher = {Nov. 8-10, 1998}, abstract = {This study analyzes changes in the value of defined benefit (DB) pension plans over time. It uses summary plan descriptions provided by the employers of respondents to the Survey of Consumer Finances (SCF) in 1983 and in 1989, applying them to similar earnings histories. Pension changes between 1990 and 1995 are also analyzed, using employer plan descriptions for large firms published by the Watson Wyatt Company. Substantial changes are found in pension values and pension accruals between the two SCF cross-sections. For example, the median value of DB plans at age 55 is 40 percent higher in 1989 than in 1983. Also, early retirement age falls over the time period. Because there are important changes in the composition of the pensions in each cross-section, those who are covered by the same plan in both years experience smaller changes than are suggested by comparing cross-section data from two different time periods. Nevertheless, those who are continuously covered by the same pension also experience important pension changes over the period. For example, a fifth of those continuously covered by a defined benefit plan experiences a substantial change in early retirement date and early retirement benefits. In addition, subgroups of continuously covered workers experience pension changes in opposite directions. These changes will have a substantial influence on retirement behavior, but are dampened when comparing the differences over time in the means and medians of plan features and plan values. Using the data from Watson Wyatt on the pensions offered by thirty-nine of the fifty largest companies, we also find similar evidence of important changes over the period 1990 to 1995. Again a sizable minority of firms experience very large changes in their plans. These findings suggest that changes in successive cross-sections of pensions will exaggerate the changes in continuing plans. Nevertheless, substantial errors will be introduced into retirement studies if pension incentives and pension values are estimated from a single cross-section under the assumption that pension plans remain stable over time.}, keywords = {Methodology, Pensions}, url = {https://ideas.repec.org/p/nbr/nberwo/6854.html}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {10853, title = {Effects of pensions on savings: analysis with data from the health and retirement study}, journal = {Carnegie-Rochester Conference Series on Public Policy}, volume = {50}, year = {1999}, pages = {271 - 324}, abstract = {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 expected, 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.}, isbn = {0167-2231}, doi = {10.1016/S0167-2231(99)00030-5}, author = {Alan L Gustman and Thomas L. Steinmeier} } @article {5381, title = {Employer Provided Pension Data in the NLS Mature Women{\textquoteright}s Survey and in the Health and Retirement Study}, year = {1999}, institution = {National Bureau of Economics Research}, abstract = {We compute pension wealth from employer provided pension plan descriptions matched to respondent surveys to the National Longitudinal Survey of Mature Women (NLS-MW) and the Health and Retirement Study (HRS). These calculations provide detailed information on the level and distribution of pension wealth and a variety of incentives from pensions. Differences between the pensions of men and women are largely explained by differences in earnings. However, there also are differences in the shapes of the pension accrual profiles of defined benefit plans that are likely to reflect tenure of women. Pension coverage is lower in the NLS-MW than in the HRS. As a result, wealth is lower in the NLS-MW than in the HRS. But the difference in coverage is not due to the effects of pension matching. Pension values for covered respondents are similar between the NLS-MW and HRS surveys. Systematic differences between the surveys in the rate at which pensions were matched do not have a major effect on findings as to the levels and distributions of pension wealth between the surveys.}, keywords = {Consumption and Savings, Employment and Labor Force, Income, Methodology, Net Worth and Assets, Pensions, Retirement Planning and Satisfaction}, author = {Alan L Gustman and Thomas L. Steinmeier} } @inbook {5152, title = {Pension and Social Security Wealth in the Health and Retirement Study}, booktitle = {Wealth, Work and Health: Innovations in Measurement in the Social Sciences}, year = {1999}, note = {RDA 1996-005; Revision of Pension Research Council Working Paper PRC WP 97-3 ProCite field 8 : eds.}, pages = {150-208}, publisher = {University of Michigan Press}, organization = {University of Michigan Press}, address = {Ann Arbor, MI}, abstract = {This study attempts to understand the impact of pension and social security wealth on decisions made by people of retirement age. Their in-depth analysis of the Health and Retirement Study gives many interesting findings. Of those people participating in the Health and Retirement Study, more then half of the wealth is in the form of social security, pensions, and health insurance. Various topics are explored in this paper.}, keywords = {Net Worth and Assets, Pensions, Social Security}, author = {Alan L Gustman and Olivia S. Mitchell and Andrew A. Samwick and Thomas L. Steinmeier}, editor = {James P Smith and Robert J. Willis} } @article {5379, title = {Effects of Pensions on Savings: Analysis with Data from the Health and Retirement Study}, number = {6681}, year = {1998}, note = {RDA 1996-005 ProCite field 8 : Dartmouth College and NBER; TX Tech U}, institution = {NBER}, address = {Cambridge}, abstract = {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 expected, 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.}, keywords = {Adult children, Consumption and Savings, Employment and Labor Force, Income, Net Worth and Assets, Pensions, Retirement Planning and Satisfaction, Social Security}, url = {https://www.nber.org/papers/w6681.pdf}, author = {Alan L Gustman and Thomas L. Steinmeier} } @inbook {5176, title = {Privatizing Social Security: First Round Effects of a Generic Voluntary Privatized U.S. Social Security System}, booktitle = {Privatizing Social Security}, year = {1998}, note = {ProCite field 8 : ed.}, pages = {313-57}, publisher = {University of Chicago Press}, organization = {University of Chicago Press}, address = {Chicago, IL}, keywords = {Methodology, Public Policy, Social Security}, author = {Alan L Gustman and Olivia S. Mitchell and Thomas L. Steinmeier}, editor = {Feldstein, M.S.} } @article {5332, title = {Pension and Social Security Wealth in the Health and Retirement Study}, year = {1997}, note = {ProCite field 8 : Dartmouth College and NBER}, institution = {National Bureau of Economic Research}, abstract = {Together, pensions, social security and health insurance account for half of the wealth held by all households in the Health and Retirement Study (HRS), for 60 percent of total wealth of HRS households who are in the 45th to 55th wealth percentiles, and even for 48 percent of wealth for those in the 90th to 95th wealth percentiles. The HRS surveys households aged 51 to 61 in 1992, and obtains pension plan descriptions from respondents{\textquoteright} employers. Pension accrual profiles, income and wealth distributions by type, wealth-income ratios and accrued wealth by pension status are also explored.}, keywords = {Consumption and Savings, Income, Medicare/Medicaid/Health Insurance, Methodology, Net Worth and Assets, Pensions, Retirement Planning and Satisfaction, Social Security}, doi = {10.3386/w5912}, url = {https://www.nber.org/papers/w5912}, author = {Alan L Gustman and Olivia S. Mitchell and Andrew A. Samwick and Thomas L. Steinmeier} } @article {6539, title = {Older Union and Nonunion Workers and their Jobs in the Health and Retirement Survey}, journal = {Proceedings: Industrial Relations Research Association}, volume = {January}, year = {1995}, pages = {44-53}, publisher = {January}, abstract = {This paper compares a variety of factors associated with retirement between those who are covered by a union on their job and those who are not. Despite the well-publicized decline in union coverage and the elimination of opportunities in the union sector, union members approaching retirement age seem to be enjoying the same benefits they would have when unions were stronger. Union membership among this cohort is still 25 for men and almost 20 for women. Results show that these union members have much higher coverage by pensions and health insurance than non-members. These pension plans are likely to be defined benefit plans and therefore are more likely to encourage early retirement, making these holders more likely to expect to retire earlier.}, keywords = {Employment and Labor Force, Retirement Planning and Satisfaction}, author = {Alan L Gustman and Olivia S. Mitchell and Thomas L. Steinmeier} } @article {6535, title = {Retirement Measures in the Health and Retirement Survey}, journal = {The Journal of Human Resources}, volume = {30}, year = {1995}, pages = {S57-S83}, publisher = {30}, abstract = {The HRS offers researchers the opportunity to explore a vast amount of detailed information that will help to answer outstanding questions about retirement. The survey provides new information, based on better measures than have ever been available before, that could help evaluate current programs and improve future policy design. The following areas of the HRS are praised for providing excellent data that will help researchers answer outstanding questions: labor, economic status, health status, family, and disability plan participation. Unique features such as administrative records on earnings and SS benefits and employer-provided data on pensions and health insurance are also described.}, keywords = {Demographics, Retirement Planning and Satisfaction}, author = {Alan L Gustman and Olivia S. Mitchell and Thomas L. Steinmeier} } @article {6525, title = {The Role of Pensions in the Labor Market: A Survey of The Literature}, journal = {Industrial and Labor Relations Review}, volume = {47}, year = {1994}, pages = {417-438}, publisher = {47}, abstract = {This review of recent research on pensions explores how pensions influence employee compensation, retirement, turnover, and other matters central to the determination of labor{\textquoteright}s price and quantity over time. The paper discusses the various reasons why employers offer pension plans, the benefits they get out of them, and the reasons why employees want them. The HRS is mentioned as a footnote to the explanation of the two primary types of benefit plans- - defined contribution (DC) and defined benefit (DB). HRS data indicates that among the 67 of workers who were covered by a pension, 43 were covered by a DB plan only, 29 by a DC plan only, and 26 had a combination of the two.}, keywords = {Employment and Labor Force, Pensions}, doi = {10.1177/001979399404700304}, author = {Alan L Gustman and Olivia S. Mitchell and Thomas L. Steinmeier} }