@article {10581, title = {How Reliant are Older Americans on State and Local Government Pensions?}, number = {WP 2019-399}, year = {2019}, type = {Report}, abstract = {State and local government pension plans cover about 19.5 million participants, and many participants are heavily reliant on these pensions for retirement income. Most of these plans, however, are underfunded. Based on data from the Health and Retirement Study, we examined the lifetime work histories of those observed at ages 67 to 72 in 2004, 2008, or 2014. Seventy-seven percent of single persons and 61 percent of couple households had never worked for state or local (S\&L) government. Among those single and couple households who did work for S\&L government, we found that they have on average more years of education and more economic resources. Among currently retired and near-retirement households, we compared economic preparation for retirement according to their lifetime employment in the S\&L sector, and we examined how economic preparation would be affected if pension benefits were cut. Based on stochastic simulations, which account for uncertainty about length of life and out-of-pocket medical expenditures, we found that economic preparation for retirement among those with S\&L government work histories would only be modestly reduced if their pension income were cut. Under a 50 percent cut to all pension income of households with any S\&L sector work, only an additional three to four percent of these households would no longer be prepared for retirement. The change is modest because households with S\&L employment have better preparation than other households; some of the cuts are paid for by reduced taxes; and the affected households will bequeath less.}, url = {https://mrdrc.isr.umich.edu/pubs/how-reliant-are-older-americans-on-state-and-local-government-pensions/}, author = {Philip Armour and Michael D Hurd and Susann Rohwedder} } @article {8953, title = {Heterogeneity in spending change at retirement.}, journal = {Journal of the Economics of Ageing}, volume = {1-2}, year = {2013}, month = {2013 Nov}, pages = {60-71}, abstract = {

The simple one-good model of life-cycle consumption requires that consumption be continuous over retirement; yet prior research based on partial measures of consumption or on synthetic panels indicates that spending drops at retirement, a result that has been called the retirement-consumption puzzle. Using panel data on total spending, nondurable spending and food spending, we find that spending declines at small rates at retirement, rates that could be explained by mechanisms such as the cessation of work-related expenses, unexpected retirement due to a health shock or by the substitution of time for spending. We find substantial heterogeneity in spending change at retirement: in the upper half of the wealth distribution spending increased. In the low-wealth population where spending did decline at higher rates, the main explanation for the decline appears to be early retirement due to poor health, possibly augmented by a short planning horizon by a minority of the population.

}, keywords = {Older Adults, Retirement Planning and Satisfaction}, issn = {2212-828X}, doi = {10.1016/j.jeoa.2013.09.002}, author = {Michael D Hurd and Susann Rohwedder} } @inbook {5186, title = {Healthy, Wealthy, and Knowing Where to Live: Trajectories of Health, Wealth, and Living Arrangements among the Oldest Old}, booktitle = {Analyses in the Economics of Aging}, year = {2005}, note = {ProCite field 6 : In ProCite field 8 : ed.}, pages = {241-275}, publisher = {University of Chicago Press}, organization = {University of Chicago Press}, address = {Chicago}, abstract = {There are many mechanisms that suggest that living arrangements and well-being derived from health and economic status are closely related. This paper investigates the joint evolution of the three conditions, using a microeconometric approach similar to what is known as vector autoregressions (VAR) in the macroeconomics literature.}, keywords = {Consumption and Savings, Health Conditions and Status, Net Worth and Assets}, doi = {10.3386/w9897}, author = {Florian Heiss and Michael D Hurd and Axel Borsch-Supan}, editor = {David A Wise} } @article {6852, title = {Health, Wealth, and the Role of Institutions}, journal = {Journal of Human Resources}, volume = {38}, year = {2003}, pages = {386-415}, publisher = {38}, abstract = {A positive relationship between socioeconomic status and health has been observed over many populations and many time periods. One of the factors mediating this relation is the institutional environment in which people function. We consider longitudinal data from two countries with very different institutional environments. the United States and The Netherlands. To structure the empirical analysis. we develop a theoretical model relating changes in health status to income and changes in income to health status. We show that income or wealth inequality is closely connected with health inequality. We empirically estimate counterparts to the theoretical relationships with generally corroborative results.}, keywords = {Demographics, Health Conditions and Status}, url = {http://www.nber.org/ confer/2001/si2001/hurd.pdf}, author = {Michael D Hurd and Arie Kapteyn} } @article {6853, title = {Healthy, wealthy, and wise? Tests for direct casual paths between health and socioeconomic status}, journal = {Journal of Econometrics}, volume = {112}, year = {2003}, note = {RDA; National Institute on Aging through a grant to the NBER Program Project on the Economics of Aging (P01-AG 05842)}, pages = {3-56}, publisher = {112}, abstract = {This paper provides statistical methods that permit the association of socioeconomic status and health to be partially unraveled in panel data by excluding some postulated causal paths, or delimiting their range of action. These methods are applied to the Asset and Health Dynamics of the Oldest Old (AHEAD) Panel to test for the absence of causal links from socioeconomic status (SES) to health innovations and mortality, and from health conditions to innovations in wealth. We conclude that in this elderly American population, where Medicare covers most acute care and pension income is not affected by ability to work, the evidence supports the hypothesis of no direct causal link from SES to mortality and to incidence of most sudden onset health conditions (accidents and some acute conditions), once initial health conditions are controlled, but there is an association of SES with incidence of gradual onset health conditions (mental conditions, and some degenerative and chronic conditions), due either to causal links or to persistent unobserved behavioral or genetic factors that have a common influence on both SES and innovations in health. There is little evidence to support a broad association of health conditions and wealth changes. The death of a spouse appears to have a negative effect on the wealth of the survivor; this is plausibly a direct causal effect. There is evidence for some association of health conditions with increased dissaving from liquid wealth for intact couples and singles. From these findings, we conclude that there is no evidence that SES-linked therapies for acute diseases induce mortality differentials. The question of whether SES linked preventative care influences onset of chronic and mental diseases remains open.}, keywords = {Demographics, Health Conditions and Status, Socioeconomic factors}, url = {http://emlab.berkeley.edu/users/mjansson/Courses/ECON242_SPRING02/McFadden.pdf}, author = {Adams, Peter and Michael D Hurd and Daniel McFadden and Merrill, Angela and Ribeiro, Tiago} } @inbook {5121, title = {Household Wealth of the Elderly under Alternative Imputation Procedures}, booktitle = {Inquiries in the economics of aging}, year = {1998}, note = {ProCite field[3]: U CA, Berkeley and NBER; SUNY, Stony Brook, RAND, and NBER; U CA, Berkeley}, pages = {229 -54}, publisher = {University of Chicago Press}, organization = {University of Chicago Press}, address = {Chicago and London}, abstract = {Although many reach retirement with few resources except housing equity and a claim to social security and Medicare, financial wealth, nonetheless, makes an important contribution to the economic status of many of the elderly. Most of our up-to-date information about the wealth of the elderly is based on the Survey of Income and Program Participation (SIPP), which sometimes adds an asset module to its core survey. As in many surveys of assets, the rate of missing data on individual asset items is high, about 30 to 40 percent among those with the asset. This raises the issue of the reliability of SIPP wealth measures because respondents who refuse or are unable to give a value to an asset item may not be representative of the population. Indeed, in the Health and Retirement Survey (HRS) it is clear that asset data are not missing at random. Through the use of bracketing methods, which we will discuss below, the HRS was able to reduce the rate of missing asset data substantially, and the data that were added in this way increased mean wealth in the HRS by about 40 percent (Smith 1995). Furthermore, because the additional data increased the mean so much, they undoubtedly increased measures of wealth inequality. }, keywords = {Consumption and Savings, Demographics, Income, Net Worth and Assets, Retirement Planning and Satisfaction}, url = {https://www.nber.org/chapters/c7088}, author = {Hoynes, Hilary and Michael D Hurd and Chand, Harish}, editor = {David A Wise} }