@article {12533,
	title = {How Well Do Retirees Assess the Risks They Face in Retirement?},
	number = {IB$\#$22-10},
	year = {2022},
	institution = {Center for Retirement Research at Boston College},
	address = {Chestnut Hill, MA},
	abstract = {The brief{\textquoteright}s key findings are:

Retirees face many financial risks, such as outliving their money, investment losses, and unexpected health expenses.
How important are these risks and how well do retirees perceive them?
The analysis finds a big disconnect between how actual and perceived risks are ranked:Actual: 1) longevity; 2) health; and 3) market.
Perceived: 1) market; 2) longevity; and 3) health.
In short, retirees overestimate market volatility and underestimate how long they will live and their health costs.},
	keywords = {Financial risks, health costs, Retirement},
	url = {https://crr.bc.edu/briefs/how-well-do-retirees-assess-the-risks-they-face-in-retirement/},
	author = {Wenliang Hou}
}
@article {Hou12,
	title = {Measuring Racial/Ethnic Retirement Wealth Inequality},
	journal = {The Journal of Retirement},
	volume = {8},
	year = {2021},
	pages = {12{\textendash}28},
	abstract = {As the US population becomes more diverse, it will be increasingly important for policymakers addressing Social Security{\textquoteright}s solvency to understand how reliant various racial and ethnic groups will be on the program versus other sources of retirement wealth. Yet, to date, studies on retirement wealth have tended not to focus on race and ethnicity, have largely ignored the role of Social Security, or have excluded the most recent cohort approaching retirement{\textemdash}the Late Boomers. This project uses data from the Health and Retirement Study (HRS) to document the retirement resources of White, Black, and Hispanic households at various points in the wealth distribution for five HRS cohorts of 51- to 56-year-olds between 1992 and 2016.TOPICS: Retirement, wealth management, social securityKey Findings▪ In 2016, the typical Black household had 46 percent of the retirement wealth of the typical White household; the typical Hispanic household had 49 percent. This inequality would be much higher but for the presence of Social Security.▪ The 1992 to 2010 HRS cohorts showed little change in retirement wealth inequality, although a decline in 51- to 56-year-old White households{\textquoteright} retirement wealth between 2010 and 2016 narrowed the racial and ethnic gaps in retirement wealth slightly.▪ The progressivity of Social Security, combined with lower average incomes for minority households, means that replacement rates are more equal than wealth{\textemdash}in 2016, the replacement rate of Black households was 82 percent of White households and Hispanic households was 95 percent.},
	keywords = {Retirement, Social Security, Wealth management},
	issn = {2326-6899},
	doi = {10.3905/jor.2020.1.079},
	author = {Wenliang Hou and Geoffrey T. Sanzenbacher}
}
@article {10976,
	title = {Are homeownership patterns stable enough to tap home equity?},
	journal = {The Journal of Economics of Ageing},
	volume = {17},
	year = {2020},
	abstract = {As retirees live longer, spend more on medical care, and get less income replaced by Social Security, many may need to consider tapping their home equity to be comfortable in retirement. The most direct way to access home equity is downsizing, but few choose this option because they generally prefer to stay in their house. The alternative is withdrawing equity through a reverse mortgage or a property tax deferral, but few households use these options either. While this low take-up has been well documented, a more fundamental question is the extent to which homeowners exhibit sufficient stability in their housing patterns to make them well-suited to tap their equity. For example, if homeowners do tap their equity and then end up moving, they have to pay back the loan with interest, which could leave them with inadequate resources at a vulnerable time in their life. This paper assesses how likely households are to move as they age to see if borrowing against one{\textquoteright}s home is a reasonable financial strategy. The analysis uses the Health and Retirement Study (HRS) to analyze three cohorts: the HRS cohort (ages 50{\textendash}54 in 1992), the AHEAD cohort (ages 70{\textendash}74 in 1993), and a synthetic cohort covering the whole lifespan from age 50 to death. The analysis identifies typical housing trajectories in retirement and explores how often, and for whom, tapping home equity would be a viable strategy. The paper found that:{\textbullet}Seventy percent of households have very stable homeownership patterns, even over several decades. They either stay in the home they own in their 50 s (53 percent) or purchase a new home around retirement and stay for the rest of their life (17 percent).{\textbullet}The 30 percent of households that do move consist of two distinct subgroups. Frequent movers (14 percent) appear to face labor market challenges. Late movers (16 percent) look like a slightly more affluent version of the households that never move, but then face a health shock that forces them out of the home that they owned into a rental unit or a long-term services and supports facility.{\textbullet}Overall, the findings largely support the narrative from prior research that most people want to age in place and move only in response to a shock. The policy implications of the findings are:{\textbullet}Most homeowners experience enough residential stability to tap home equity through reverse mortgages or property tax deferrals.{\textbullet}Retirees might be more likely to tap their home equity if they felt that they had adequate public or private insurance protection against the risk of needing long-term services and supports.},
	keywords = {Home equity, Housing trajectories, Property tax deferrals, retirement security, Reverse mortgage, Sequence analysis},
	isbn = {2212-828X},
	doi = {https://doi.org/10.1016/j.jeoa.2020.100277},
	author = {Alicia H. Munnell and Abigail N. Walters and Belbase, Anek and Wenliang Hou}
}
@article {10553,
	title = {Are Homeownership Patterns Stable Enough to Tap Home Equity?},
	number = {WP$\#$2020-7},
	year = {2020},
	institution = {Center for Retirement Research at Boston College},
	abstract = {As retirees live longer, spend more on medical care, and get less income replaced by Social Security, many may need to tap their home equity to be comfortable in retirement.  The most direct way to access home equity is downsizing, but few choose this option because they generally prefer to stay in their house.  The alternative is withdrawing equity through a reverse mortgage or a property tax deferral, but few households use these options either.  A potential reason that homeowners are reluctant to borrow against their house is that, if they do decide to move, they have to pay back the loan with interest, which could leave them with inadequate resources at a vulnerable time in their life.  This paper assesses how likely households are to move as they age to see if borrowing against one{\textquoteright}s home is a viable financial strategy.  The analysis uses the Health and Retirement Study (HRS) to analyze three cohorts: the HRS cohort (ages 50-54 in 1992), the AHEAD cohort (ages 70-74 in 1993), and a synthetic cohort covering the whole lifespan from age 50 to death.  The analysis identifies typical housing trajectories in retirement and explores how often, and for whom, tapping home equity would be a viable strategy.},
	keywords = {Home ownership},
	url = {https://crr.bc.edu/working-papers/are-homeownership-patterns-stable-enough-to-tap-home-equity/},
	author = {Alicia H. Munnell and Abigail N. Walters and Belbase, Anek and Wenliang Hou}
}
@article {10961,
	title = {How Accurate Are Retirees{\textquoteright} Assessments of Their Retirement Risk?},
	number = {WP$\#$2020-14},
	year = {2020},
	institution = {Center for Retirement Research at Boston College},
	address = {Boston},
	abstract = {Retirees with limited financial resources face numerous risks, including out-living their money (longevity risk), investment losses (market risk), unexpected health expenses (health risk), the unforeseen needs of family members (family risk), and even retirement benefit cuts (policy risk). This study systematically values and ranks the financial impacts of these risks from both the objective and subjective perspectives and then compares them to show the gaps between retirees{\textquoteright} actual risks and their perceptions of the risks in a unified framework. It finds that 1) under the empirical analysis, the greatest risk is longevity risk, followed by health risk; 2) under the subjective analysis, retirees perceive market risk as the highest-ranking risk due to their exaggeration of market volatility; and 3) the longevity risk and health risk are valued less in the subjective ranking than in the objective ranking, because retirees underestimate their life spans and their health costs in late life.},
	keywords = {family risk, health risk, longevity risk, market risk, policy risk},
	url = {https://crr.bc.edu/working-papers/how-accurate-are-retirees-assessments-of-their-retirement-risk/},
	author = {Wenliang Hou}
}
@article {10554,
	title = {Measuring Racial/Ethnic Retirement Wealth Inequality},
	number = {WP$\#$2020-2},
	year = {2020},
	institution = {Center for Retirement Research at Boston College},
	abstract = {As the U.S. population becomes more diverse, it will be increasingly important for policymakers addressing Social Security{\textquoteright}s solvency to understand how reliant various racial and ethnic groups will be on the program versus other sources of retirement wealth.  Yet, to date, studies on retirement wealth have tended not to focus on race and ethnicity, have largely ignored the role of Social Security, or have excluded the most recent cohort approaching retirement {\textendash} the Late Boomers.  This project uses data from the Health and Retirement Study (HRS) to document the retirement resources of white, black, and Hispanic households at various points in the wealth distribution for five HRS cohorts of 51-56 year olds between 1992 and 2016.

},
	keywords = {race-ethnicity, Wealth Inequality},
	url = {https://crr.bc.edu/working-papers/measuring-racial-ethnic-retirement-wealth-inequality/},
	author = {Wenliang Hou and Geoffrey T. Sanzenbacher}
}
@article {RePEc:crr:issbrf:ib2020-2,
	title = {Social Security Is a Great Equalizer},
	year = {2020},
	institution = {Center for Retirement Research},
	abstract = {As the U.S. population becomes more diverse, it will be increasingly important for policymakers addressing Social Security{\textquoteright}s solvency to understand the extent to which various racial and ethnic groups rely on Social Security versus other sources of retirement wealth. Yet, to date, studies on retirement wealth have tended not to focus on race and ethnicity and have largely ignored the role of Social Security. This brief, based on a recent paper, uses data from the Health and Retirement Study (HRS) to document the retirement resources of white, black, and Hispanic households at various points in the wealth distribution for five cohorts of 51-56 year olds between 1992 and 2016. The discussion proceeds as follows. The first section explains the calculation of retirement wealth. The second section shows how Social Security reduces retirement wealth inequality by race and ethnicity for typical households in each cohort. The third section looks at the impact of Social Security on retirement wealth inequality across wealth quintiles in a single year. The fourth section shifts from wealth to income to examine replacement rates {\textendash} the ratio of projected retirement income to pre-retirement earnings. The final section concludes that, as policymakers consider changes to bring Social Security into fiscal balance, the distributional impact of any benefit cuts with respect to minority groups may be worth considering.},
	keywords = {Social Security},
	url = {https://ideas.repec.org/p/crr/issbrf/ib2020-2.html},
	author = {Wenliang Hou and Geoffrey T. Sanzenbacher}
}
@article {hou_munnell_sanzenbacher_li_2020,
	title = {Why are US men retiring later?},
	journal = {Journal of Pension Economics and Finance},
	volume = {19},
	year = {2020},
	pages = {442{\textendash}457},
	abstract = {
Over the past two decades, the share of individuals claiming Social Security at the Early Eligibility Age has dropped and the average retirement age has increased. At the same time, Social Security rules have changed substantially, employer-sponsored retirement plans have shifted from defined benefit (DB) to defined contribution (DC), health has improved, and mortality has decreased. In theory, all of these changes could lead to a trend toward later claiming. Disentangling the effect of any one change is difficult because they have been occurring simultaneously. This paper uses the Gustman and Steinmeier structural model of retirement timing to investigate which of these changes matter most by simulating their effects on the original cohort (1931{\textendash}1941) of the Health and Retirement Study (HRS). The predicted behavior is then compared with the actual retirements of the Early Boomer cohort (1948{\textendash}1953) to see how much of the later cohort{\textquoteright}s delayed claiming and retirement can be explained by these changes. The Early Boomer cohort was less likely to be fully retired than the HRS cohort at both age 62 (36.7\% vs. 44.0\%) and age 64 (49.5\% vs. 53.9\%). The model suggests that the shift from DB toward DC plans was the biggest contributor to these declines, followed by better health. Social Security rules and improvements in mortality played smaller roles.},
	keywords = {Pension plans, Retirement Decision, retirement timing, Social Security, structural model},
	doi = {10.1017/S1474747218000331},
	author = {Wenliang Hou and Alicia H. Munnell and Geoffrey T. Sanzenbacher and Yinji Li}
}
@article {RePEc:crr:issbrf:ib2020-4,
	title = {Why Do Late Boomers Have So Little Retirement Wealth?},
	year = {2020},
	institution = {Center for Retirement Research at Boston College },
	type = {Report},
	address = {Boston},
	abstract = {Over the last 40 years, the retirement system has shifted from defined benefit plans to defined contribution plans, primarily 401(k)s and Individual Retirement Accounts (IRAs). This shift has been accompanied by a decline in Social Security benefits relative to pre-retirement earnings as the program{\textquoteright}s Full Retirement Age has moved from 65 to 67. Thus, the expected pattern when examining retirement wealth across cohorts is relatively less wealth from defined benefit plans and Social Security and much more from 401(k)s and IRAs. However, the numbers for the most recent cohort in the Health and Retirement Study {\textendash} the Late Boomers {\textendash} show not only the predicted declines in defined benefit plans and Social Security but also an unexpected drop in 401(k)/IRA assets. This drop is alarming given that Late Boomers, who were ages 51-56 in 2016, would have spent the majority of their careers in a defined contribution world. This brief is a first pass at trying to explain why this younger cohort has less in 401(k)/IRA assets than older cohorts had at the same age and what that means for the future of retirement security. The discussion proceeds as follows. The first section identifies the cohorts that are examined and the calculation of retirement wealth. The second section identifies a turn in the fortunes of Late Boomers during the Great Recession, when a significant share stopped working. But lack of employment does not explain the whole problem, so the third section follows working households and finds that after the Great Recession they had lower earnings, less 401(k) participation, and flat 401(k) balances, ending up well below earlier cohorts. A look at more recent cohorts offers a mixed picture for the future. The final section concludes that the Late Boomers{\textquoteright} low 401(k)/IRA wealth can be explained by particularly high levels of unemployment during the Great Recession and more reliance on lower-paid jobs when they re-entered the labor market. Why they were so hard hit, wh},
	keywords = {Retirement wealth, Social Security},
	url = {https://crr.bc.edu/wp-content/uploads/2020/02/IB_20-4.pdf},
	author = {Anqi Chen and Wenliang Hou and Alicia H. Munnell}
}
@article {10627,
	title = {How Best to Annuitize Defined Contribution Assets?},
	number = {WP$\#$2019-13},
	year = {2019},
	institution = {Center for Retirement Research at Boston College},
	type = {Report},
	address = {Newton, MA},
	abstract = {Unlike defined benefit pensions that provide participants with steady benefits for as long as they live, 401(k) plans and Individual Retirement Accounts (IRAs) provide little guidance on how to turn accumulated assets into income.  As a result, retirees have to decide how much to withdraw each year and face the risk of either spending too quickly and outliving their resources or spending too conservatively and consuming too little.  Surveys of individuals{\textquoteright} plans and several recent studies suggest that people will not draw down their accumulations for fear that they will exhaust their money and be unable to cover end-of-life health care costs.  They also must consider how to invest their savings after retirement.  These are difficult decisions.

Better strategies are possible that will ensure a higher level of lifetime income, reduce the likelihood that people will outlive their resources, and alleviate some of the anxiety associated with post-retirement investing.  Workers could use a portion of their 401(k) and IRA assets to purchase an immediate annuity that pays a fixed amount throughout their lives, typically starting at age 65.  Or they could purchase an advanced life deferred annuity (ALDA) that requires a smaller share of accumulated assets and begins payments at a later age like 85.  Alternatively, they could use their assets to delay claiming Social Security {\textendash} essentially purchasing an inflation-indexed annuity.  Right now, none of these three options is commonly used.  Very few workers choose to purchase immediate or deferred annuities (the first two options).  And few retirees appear to be deferring claiming in order to receive the maximum annuity income from Social Security {\textendash} most people simply retire earlier and claim immediately.

Increasing annuitization in a meaningful way would require embedding annuities in 401(k) plans, with annuitization as the default.  Recent proposed federal legislation, such as the SECURE Act (Setting Every Community Up for Retirement Enhancement), encourages plan sponsors to offer annuities in their plans by establishing a fiduciary safe harbor when specific statutory conditions are followed in selecting an insurance company.  This legislation does not address, however, the question of defaults or the possibility of using 401(k) assets to purchase additional Social Security benefits.   Moving forward on these fronts would require some consensus about the appropriate share of 401(k) assets to be annuitized and the best method for annuitizing them.

To address these issues, this paper compares the level of lifetime utility generated by alternative annuitization approaches {\textendash} immediate annuities, deferred annuities, and additional Social Security through delayed claiming.  The analysis also tests different assumptions for the share of initial wealth that participants use to purchase these products.},
	keywords = {Annuitization, contribution},
	url = {https://crr.bc.edu/working-papers/how-best-to-annuitize-defined-contribution-assets/},
	author = {Alicia H. Munnell and Gal Wettstein and Wenliang Hou}
}
@article {10776,
	title = {Why Are U.S. Households Claiming Social Security Later?},
	number = {WP$\#$2017-3},
	year = {2017},
	institution = {Center for Retirement Research at Boston College},
	abstract = {Over the past two decades, the share of individuals claiming Social Security at the Early Eligibility Age has dropped, and the average retirement age has increased.  At the same time, Social Security rules have changed substantially, employer-sponsored retirement plans have shifted from defined benefit (DB) to defined contribution (DC), health has improved, and mortality has decreased.  In theory, all of these changes could lead to a trend toward later claiming.  Disentangling the effect of any one change is difficult because they have been occurring simultaneously.  This paper uses the Gustman and Steinmeier structural model of retirement timing to investigate which of these changes matter most by simulating their effects on the original cohort (1931-1941 birth years) of the Health and Retirement Study (HRS).  The predicted behavior is then compared to the actual retirements of the Early Baby Boomer cohort (1948-1953 birth years) to see how much of the later cohort{\textquoteright}s delayed claiming and retirement can be explained by these changes.},
	keywords = {Social Security, Social Security Benefits},
	url = {https://crr.bc.edu/working-papers/why-are-u-s-households-claiming-social-security-later/},
	author = {Wenliang Hou and Alicia H. Munnell and Yinji Li and Geoffrey T. Sanzenbacher}
}
@article {9029,
	title = {How Has Pension Income Changed Between 1992 and 2010?},
	number = {WP$\#$2016-3},
	year = {2016},
	institution = {Center for Retirement Research at Boston College},
	address = {Chestnut Hill, MA},
	abstract = {Using data from the 1992, 1998, 2004, and 2010 waves of the Health and Retirement Study (HRS), this paper compares pension participation, pension wealth, projected retirement income, and replacement rates attributable to past service, by pension type for households ages 51-56. The analysis includes workers{\textquoteright} pension coverage during both current and past jobs. Defined contribution (DC) wealth is simply the current account balance. DC income is calculated by projecting current plan balances to retirement, assuming no further contributions, and assuming that households then annuitize. Defined benefit (DB) wealth and income are calculated by apportioning projected benefits to past and future service. },
	url = {http://crr.bc.edu/wp-content/uploads/2016/07/wp_2016-3.pdf},
	author = {Alicia H. Munnell and Wenliang Hou and Anthony Webb and Yinji Li}
}
@article {8973,
	title = {Pension Participation, Wealth, and Income: 1992-2010},
	number = {2016-3},
	year = {2016},
	institution = {Center for Retirement Research at Boston College},
	abstract = {Using data from the 1992, 1998, 2004, and 2010 waves of the Health and Retirement Study (HRS), this paper compares pension participation, pension wealth, projected retirement income, and replacement rates attributable to past service, by pension type for households ages 51-56.  The analysis includes workers{\textquoteright} pension coverage during both current and past jobs.  Defined contribution (DC) wealth is simply the current account balance.  DC income is calculated by projecting current plan balances to retirement, assuming no further contributions, and assuming that households then annuitize.  Defined benefit (DB) wealth and income are calculated by apportioning projected benefits to past and future service.},
	url = {http://crr.bc.edu/working-papers/pension-participation-wealth-and-income-1992-2010/},
	author = {Alicia H. Munnell and Wenliang Hou and Anthony Webb and Yinji Li}
}
@article {10778,
	title = {New Evidence on the Risk of Requiring Long-Term Care},
	number = {WP$\#$2014-12},
	year = {2014},
	institution = {Center for Retirement Research at Boston College},
	abstract = {The expectation of needing long-term care is an essential input into optimal saving and long-term care insurance decisions. Previous optimization models have used the Robinson (2002) transition probabilities, which have not been systematically updated and which underpredict the use of care while overpredicting the average stay of people who enter care. We develop a new statistical model and use current data to estimate health impairment and care transition probabilities. We show that impairment and care use have declined and that, after incorporating the new transition probabilities, optimal long-term care insurance holdings are much lower and are close to actual holdings.},
	keywords = {Long-term Care},
	url = {https://crr.bc.edu/working-papers/new-evidence-on-the-risk-of-requiring-long-term-care/},
	author = {Wenliang Hou and Friedberg, Leora and Wei Sun and Anthony Webb and Zhenyu Li}
}
