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on Economics of Ageing |
| By: | Bo MacInnis |
| Abstract: | Using data from the Current Population Surveys, we find an increase in the fraction of older American men who worked without receiving Social Security retirement benefits and a decline in the fraction of men who claimed benefits without working during the period 1980-2006. Using bivariate probit regressions, we find that an increase in Social Security’s normal retirement age decreased labor force participation rate regardless of benefits receipt status; that an increase in the delayed retirement credit increased benefit receipt regardless of labor force status; and that labor force participation and claiming Social Security benefits are strongly and negatively correlated. |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2009-22&r=age |
| By: | Karen Smith; Mauricio Soto; Rudolph G. Penner |
| Abstract: | We use the 1998-2006 waves of the Health and Retirement Study (HRS) to investigate how households change their asset holdings at older ages. We find a notable increase in the net worth of older households between 1998 and 2006, with most of the growth due to housing. Our results indicate that, through 2006, older households did not spend all of their capital gains. This asset accumulation provides older households with a financial cushion for the turbulence experienced after 2007. The wealth distribution is highly skewed, and the age patterns of asset accumulation and decumulation vary considerably by income group. High-income seniors increase assets at older ages. Middle-income seniors reduce their assets in retirement, but at a rate that for most seniors will not deplete assets within their expected life. Many low-income seniors accumulate fewer assets and spend their financial assets at a rate that will mostly deplete them at older ages, leaving low-income seniors with only Social Security and DB pension income at older ages. |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2009-31&r=age |
| By: | David de la CROIX (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques etSsociales (IRES) and Center for Operations Research and Econometrics (CORE)); Pierre PESTIEAU (University of Liege, CORE, Paris School of Economics and CEPR); Grefory PONTHIERE (Paris School of Economics and Ecole Normale Superieure, Paris) |
| Abstract: | Introduced by Samuelson (1975), the Serendipity Theorem states that the competitive economy will converge towards the optimum steady-state provided the optimum population growth rate is imposed. This paper aims at exploring whether the Serendipity Theorem still holds in an economy with risky lifetime. We show that, under general conditions, including a perfect annuity market with actuarially fair return, imposing the optimum fertility rate and the optimum survival rate leads the competitive economy to the optimum steady-state. That Extended Serendipity Theorem is also shown to hold in economies where old adults work some fraction of the old-age, whatever the retirement age is fixed or chosen by the agents. |
| Keywords: | Serendipity Theorem, fertility, mortality, overlapping generations, retirement |
| JEL: | E13 E21 I18 J10 |
| Date: | 2009–12–11 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2009040&r=age |
| By: | Scopelliti, Alessandro Diego |
| Abstract: | The paper analyzes the issue of the financial sustainability of the Italian Pension System in the long-run, by discussing the main reforms occurred in the last few years and by examining some recent data: in particular, the data of the Italian Agency for the Evaluation of Social Security Expenditure on the budget of specific funds of the Social Security System, like the Fund for Private Employees and the Funds for Public Employees, and moreover the OECD data on the evolution of the replacement rate between pension benefit and labour income. Observing the evolution over the period 1989-2006, we notice that the current deficit of the first pillar of the pension system is caused, much more than in the past, by the deficit of the Funds for Public Employees, for the relevant difference between the value of the benefits and of the contributions, which is not registered in the other funds. |
| Keywords: | pay-as-you-go system ; retirement age ; defined contribution ; financial sustainability ; replacement rate ; private pension funds |
| JEL: | H55 H53 J26 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:20077&r=age |
| By: | Giovanni Mastrobuoni |
| Abstract: | In 1995, the Social Security Administration started sending out the annual Social Security Statement. It contains information about the worker’s estimated benefits at the ages 62, 65, and 70. I use this unique natural experiment to analyze the retirement and claiming decision-making. First, I find that, despite the previous availability of information, the Statement has a significant impact on workers’ knowledge about their benefits. These findings are consistent with a model where workers need to gather costly information in order to improve their retirement decision. Second, I use this exogenous variation in knowledge to analyze the optimality of workers’ decisions. Several findings suggest that workers do not change their retirement behavior: i) Workers do not change their expected age of retirement after receiving the Statement; ii) monthly claiming patterns do not show any change after the introduction of the Social Security Statement; iii) workers do not become more sensitive to Social Security incentives after receiving the Statement. Either, workers are already behaving optimally, or the information contained in the Statement is not sufficient to improve their retirement behavior. |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2009-23&r=age |
| By: | Richard W. Johnson; Melissa M. Favreault; Corina Mommaerts |
| Abstract: | A patchwork of public programs—primarily Social Security Disability Insurance (DI), workers’ compensation, Supplemental Security Income (SSI), and veterans’ benefits—provides income supports to people unable to work. Yet, questions persist about the effectiveness of these programs. This report examines the economic consequences of disability for a sample of Americans observed from age 51 to 64. The results underscore the precarious financial state for most people approaching traditional retirement age with disabilities. Disability rates roughly double from age 55 to 64. Fewer than half who meet our disability criteria ever receive disability benefits in their fifties or early sixties. Benefit receipt rates are much higher among those with the most severe disabilities, suggesting that benefits are targeted to those least able to work. However, even when models control for disability severity, women are less likely than men to receive benefits. Those with cancer and heart problem diagnoses are more likely to receive DI, suggesting that DI favors workers with certain medical diagnoses. Poverty rates for people who collect disability benefits in their fifties and early sixties more than triple following benefit receipt. |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2009-28&r=age |
| By: | Barry Bosworth; Rosanna Smart |
| Abstract: | This study explores the consequences of the housing price bubble and its collapse for the wealth of older households. We utilize micro survey data to follow the rise in home values to 2007, observing which households enjoyed home price appreciation and how they responded in terms of equity withdrawal. We then use the SCF survey data on wealth holdings from 2007 in combination with national price indexes to simulate the magnitude and distribution of wealth loss from the 2008-2009 financial crisis. The collapse of the housing market triggered a broad decline of asset prices that greatly reduced the wealth of all households. While older households mitigated their real estate and equity losses with relatively stable fixed-value assets and pension programs, no demographic group was left unscathed. Prior to the financial crisis, our study and others had concluded that the current baby-boom cohort of near retirees were surprisingly well-prepared for retirement compared with similarly aged households over the past quarter century. Unless there is a strong recovery of asset values in the next few years, that favorable assessment is no longer true. |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2009-21&r=age |
| By: | Pudney S (Institute for Social and Economic Research) |
| Abstract: | We analyse FRS survey data on the relationship between disability and receipt of the Attendance Allowance (AA) disability benefit by older people. Despite being non-means-tested, we find that AA is implicitly income-targeted and strongly targeted on those with care needs. We focus particularly on the receipt of higher-rate benefit, intended for those in need of day-and-night care, finding that, in practice, higher-rate payments are negatively related to age and income, in addition to care needs. The allocation of higher-rate AA awards strongly favours people with physical rather than cognitive disabilities. |
| Date: | 2010–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:ese:iserwp:2010-02&r=age |
| By: | Gary V. Engelhardt; Jonathan Gruber |
| Abstract: | We examine the impact of the expansion of public prescription prescription-drug insurance coverage from Medicare Part D has had on the elderly and find evidence of substantial crowd-out. Using detailed data from the 2002-6 waves of the Medical Expenditure Panel Survey (MEPS), we estimate that the extension of Part D benefits resulted in 75% crowd-out of prescription drug insurance coverage and 33%-50% crowd-out of prescription drug expenditures of those 65 and older. Part D is associated with relatively small reductions in out-of-pocket spending. This suggests that the welfare gain from protecting the elderly from out-of-pocket spending risk through Part D has been small. |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2009-24&r=age |
| By: | Norma B. Coe; Anthony Webb |
| Abstract: | Using data from the Health and Retirement Study, we compare actual inheritances received during the period 1994 to 2004 with the amounts that, in 1994, households anticipated receiving within 10 years. We find little evidence of systematic forecasting errors. The factors affecting inheritance receipt also affect expectation formation. Although the distribution is highly skewed, inheritances are generally modest in amount and uncorrelated with lifetime income, and therefore have almost no effect on various measures of inequality. We find no evidence that households anticipating receipt of an inheritance save less than that of similar households, although this could reflect unobserved heterogeneity in tastes for saving. |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2009-32&r=age |