November 2021
26Nov

An Overview of Retirement Income Planning

By Wade D. Pfau Retirement income planning has emerged as a distinct field within financial planning with the realization that risks change dramatically in retirement. The combination of longevity risk, increasing market risk triggered by taking distributions from assets, and spending shocks create new challenges. Wealth management has traditionally focused on accumulating assets without applying further thought to these differences happening after retirement. Retirees experience reduced capacity to bear financial market risk once they have retired. This calls for different...

November 26, 2021
Articles, Pension design, ,
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13Nov

The State of Retirement Income: Safe Withdrawal Rates 

What’s a safe withdrawal rate for retirees? We estimate 3.3%. However, there are various factors that could affect this percentage, resulting in the retiree withdrawing a significantly higher amount. This report explores ways that retirees can make their savings last longer without compromising their standard of living. Source @Morningstar

November 13, 2021
Books, Books, Pension design, Reports, , ,
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13Nov

How Will COVID-19 Affect Pensions for Noncovered Workers?

By Jean-Pierre Aubry, Kevin Wandrei, Laura Quinby Federal law allows certain state and local government employees to be excluded from Social Security if they are covered by an employer pension of sufficient generosity. As a result, approximately one-quarter of state and local workers are not covered by Social Security on their current job. Before COVID-19, these “FICA replacement plans” all satisfied the letter of the law in terms of providing benefits of sufficient generosity. This study has three aims. The...

November 13, 2021
Articles, Labor Market, Pension design, , ,
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05Nov

The Economic Burden of Pension Shortfalls: Evidence from House Prices

By Darren Aiello, Asaf Bernstein, Mahyar Kargar, Ryan Lewis & Michael Schwert U.S. state pensions are underfunded by trillions of dollars, but their economic burden is unclear. In a model of inefficient taxation, real estate fully reflects the cost of pension shortfalls when it is the only form of immobile capital. We study the effect of pension shortfalls on real estate values at state borders, where labor and physical capital could more easily relocate to a state with a smaller...

November 5, 2021
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05Nov

Pensions, Income Taxes and Homeownership: A Cross-Country Analysis

By Hans Fehr, Maurice Hofmann & George Kudrna This paper studies the role of pensions and income taxes in determining homeownership and household wealth. It provides a cross-country analysis, using tax and pension policy designs in Germany, the US and Australia. These developed nations have similar incomes per capita but very different homeownership rates, with the US and Australia having much higher homeownership compared to Germany. The question is to what extent the observed differences in homeownership are induced by...

November 5, 2021
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October 2021
22Oct

Designing a pension system

By Vincenzo Galasso Designing a pension system is both a complex endeavor and a long lasting legacy. Complexity stems from the many trade-offs that conceiving a pension system entail and from how these initial decisions affect the social and economic behavioral responses of workers and retirees. Policy-makers planning a pension system have to evaluate its internal economic consistency, but also these feedbacks. Economic and demographic models that allow a quantitative evaluation of these costs and benefits are required. More than...

October 22, 2021
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08Oct

Social Security Programs and Retirement around the World: Reforms and Retirement Incentives

By Axel Börsch-Supan & Courtney Coile This ninth phase of the International Social Security project, which studies the experiences of twelve developed countries, examines the effects of public pension reform on employment at older ages. In the last two decades, men’s labor force participation at older ages has increased, reversing a long-term pattern of decline; participation rates for older women have increased dramatically as well. While better health, more education, and changes in labor-supply behavior of married couples may have...

October 8, 2021
Books, Pension design, Regulation, , ,
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07Oct

Temporal Reframing of Recurring Savings Reduces Perceived Pain and Helps Those with Lower Financial Literacy to Save

By Stephen Shu Steve Thomas & David A. Smith While assessments of the Gig Economy vary in terms of size, growth, and heterogeneity, most studies suggest that this segment of the economy is sizeable, growing, and diverse in terms of types of work. Some concerns in the literature include both the present and future welfare of workers in the Gig Economy. More granular, temporal reframing of savings (e.g., save $5 a day versus $150 a month) has been shown to...

October 7, 2021
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07Oct

Income Trajectories in Later Life: Longitudinal Evidence from the Health and Retirement Study

By Olivia S. Mitchell, Robert Clark, Annamaria Lusardi We examine respondents in the Health and Retirement Study (HRS) to observe how their financial situations unfolded as they aged. We focus on low-income older adults and follow them over time to identify the factors associated with having low income at baseline and thereafter. We find that (a) real income remained relatively stable as individuals approached and entered retirement, and progressed through their retirement years, and (b) labor force participation declined and...

October 7, 2021
Aging, Articles, Pension design, , ,
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September 2021
30Sep

Reforming Public Sector Pensions: Solutions to a growing challenge

By Institute of Economic Affairs Submitter In its final report the Public Sector Pensions Commission finds that the true value of the main unfunded public sector pension schemes is over 40 per cent of salary. The report also finds that a lack of transparency over the true costs of public sector pensions has made it easier to delay reform in the past. Without more transparency, the true costs are unreasonably forced onto future taxpayers. Source: SSRN 1,193 views

September 30, 2021
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