@article {8143, title = {How much do respondents in the health and retirement study know about their contributions to tax-deferred contribution plans? A cross-cohort comparison}, journal = {Journal of Pension Economics and Finance}, volume = {14}, year = {2015}, note = {Export Date: 6 August 2014 Article in Press}, pages = {203-239}, publisher = {14}, abstract = {We use information from Social Security earnings records to examine the accuracy of survey responses regarding participation in tax-deferred pension plans. As employer-provided defined benefit pensions are replaced by voluntary contribution plans, employees{\textquoteright} understanding of the link between their annual contributions and their post-retirement wealth is becoming increasingly important. We examine the extent to which wage-earners in the Health and Retirement Study (HRS) correctly report their inclusion in tax-deferred contribution plans and, conditional on inclusion, their annual contributions. We use three samples representing different cohorts in three different periods: the original HRS cohort interviewed in 1992 at ages 51-56, the War Babies cohort interviewed in 1998 at ages 51-56, and the Early Baby Boomer cohort interviewed in 2004 at the same ages. Our findings indicate that while respondents interviewed in 1998 and 2004 were more likely to correctly report whether they were included in defined contribution plans, they were no more accurate when reporting whether they had contributed to their plans than respondents interviewed in 1992. Contributors in the three cohorts, moreover, overstated their annual contributions and thus would be likely to realize lower than expected account balances at retirement. The magnitude of this error is not negligible. In all three cohorts, the mean reporting error (the absolute difference between respondent-reported and Social Security earnings record contributions) was approximately 1.5 times larger than the mean contribution in the W-2 earnings record. Copyright Cambridge University Press 2014 This is a work of the U.S. Government and is not subject to copyright protection in the United States.}, keywords = {Employment and Labor Force, Pensions, Social Security}, doi = {10.1017/S1474747214000237}, author = {Irena Dushi and Honig, Marjorie} } @article {5725, title = {How Much Do Respondents in the Health and Retirement Study Know About Their Tax-deferred Contribution Plans? A Crosscohort Comparison}, number = {WP 2008-201}, year = {2008}, institution = {Michigan Retirement Research Center, University of Michigan}, address = {Ann Arbor, MI}, abstract = {We use information from Social Security earnings records to examine the accuracy of survey responses regarding participation in tax-deferred pension plans. As employer-provided defined benefit pensions are replaced by voluntary contribution plans, employees understanding of the link between their annual contribution decisions and their post-retirement wealth is becoming increasingly important. We examine the extent to which wage-earners in the Health and Retirement Study correctly report their inclusion in tax-deferred contribution plans and, conditional on inclusion, their annual contributions. We use two samples representing different cohorts in two different periods: the original HRS cohort interviewed in 1992 at ages 51-61, and a combination of the War Babies and Early Baby Boomer cohorts at the same ages interviewed twelve years later. Our findings indicate that while respondents interviewed in 2004 were more likely to report correctly whether they were included in DC plans, they were no more accurate in reporting whether they contributed to their plans than respondents interviewed in 1992. Respondents in both cohorts, moreover, overestimated their annual contributions. In both 1992 and in 2004, the mean absolute difference between respondent-reported and Social Security earnings record contributions was 1.5 times larger than the mean earnings record contribution.}, keywords = {Pensions, Social Security}, url = {https://deepblue.lib.umich.edu/bitstream/handle/2027.42/64473/wp201.pdf?sequence=1\&isAllowed=y}, author = {Irena Dushi and Honig, Marjorie} } @article {6950, title = {Household Annuitization Decisions: Simulations and empirical analyses}, journal = {Journal of Pension Economics and Finance}, volume = {3}, year = {2004}, pages = {109-143}, publisher = {3}, abstract = {Annuities provide insurance against outliving one s wealth. Previous studies have indicated that, for many households, the value of the longevity insurance should outweigh the actuarial unfairness of prices in the voluntary annuity market. Nonetheless, voluntary annuitization rates are extremely low. Previous research on the value of annuitization has compared an optimal decumulation of unannuitized wealth with the alternative of annuitizing all unannuitized wealth at age 65. We relax these assumptions, allowing households to annuitize any part of their unannuitized wealth at any age and to return to the annuity market as many times as they wish. Using numerical optimization techniques, assuming the levels of actuarial unfairness of annuities calculated in previous research, and retaining the assumption made in previous research that one half of household wealth is pre-annuitized, we conclude that it is optimal for couples to delay annuitization until they are aged 73 82, and in some cases never to annuitize. It is usually optimal for single men and women to annuitize at substantially younger ages, between 65 and 70. Households that annuitize will generally wish to annuitize only part of their unannuitized wealth. Using data from the Asset and Health Dynamics Among the Oldest Old and Health and Retirement Study panels, we show that much of the failure of the average currently retired household to annuitize can be attributed to the exceptionally high proportions of the wealth of these cohorts that is pre-annuitized. We expect younger cohorts to have smaller proportions of pre-annuitized wealth and we project increasing demand for annuitization as successive cohorts age.}, keywords = {Net Worth and Assets}, doi = {https://doi.org/10.1017/S1474747204001696}, author = {Irena Dushi and Anthony Webb} }