April 2018

23Apr

Retirement Drawdown Defaults: The Role of Implied Endorsement

By Jennifer Alonso-García (University of New South Wales (UNSW) - ARC Centre of Excellence in Population Ageing Research (CEPAR)), Hazel Bateman (University of New South Wales (UNSW) - School of Actuarial Studies, Centre for Pensions and Superannuation), Johan Bonekamp (Tilburg University - Department of Econometrics & Operations Research), Ralph Stevens (CPB Netherlands Bureau of Economic Policy Analysis; CEPAR) This paper explores whether implied endorsement can serve as an explanation for the stickiness of retirement drawdown defaults. Using an experimental survey...

April 23, 2018
Articles, Pension design, Savings, ,
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16Apr

Why Do Defaults Affect Behavior? Experimental Evidence from Afghanistan

By Joshua Blumenstock, Michael Callen, Tarek Ghani We report on an experiment examining why default options impact behavior. By randomly assigning employees to different varieties of a salary-linked savings account, we find that default enrollment increases participation by 40 percentage points—an effect equivalent to providing a 50% matching incentive. We then use a series of experimental interventions to differentiate between explanations for the default effect, which we conclude is driven largely by present-biased preferences and the cognitive cost of thinking...

April 16, 2018
Articles, Labor Market, Savings, ,
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March 2018

19Mar

Social Security Claiming Decisions: Survey Evidence

By John B. Shoven, Sita Nataraj Slavov & David A. Wise While research shows that there are large gains in lifetime wealth from delaying claiming Social Security, most people claim at or before full retirement age. We fielded an original, nationally representative survey to gain insight into people’s rationales for their Social Security claiming decisions, their satisfaction with their past claiming decisions, and how they financed any gap between retirement and claiming. Common rationales for claiming Social Security before full...

March 19, 2018
Aging, Articles, Pension design, Savings, ,
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08Mar

Old-age Labor Force Participation in Germany: What Explains the Trend Reversal among Older Men? And What the Steady Increase among Women?

By Axel Börsch-Supan, Irene Ferrari The aim of this paper is to illustrate for Germany the factors that may explain the U-shaped pattern of older men’s labor force participation - from a long declining trend that began in the early 1970s to an increasing trend starting from the late 1990s - and at the same time the steady increase in older women’s labor force participation. In a first step, we provide graphical evidence of the trends of various variables which...

March 8, 2018
Aging, Articles, Labor Market, ,
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05Mar

Pension Plans and Employee Performance: Evidence, Analysis, and Policy

By Richard A. Ippolito In this provocative book, Richard A. Ippolito explores the relationship between employees' preferences for certain types of pension plans and their productivity. Ippolito begins by reviewing how pensions influence workers' behavior on the job, helping employers reduce early quit rates and increase early retirement rates. In a novel contribution, Ippolito then shows how pensions can assist employers in attracting and retaining workers who have personal attributes valued by the firm. Challenging the accepted view of defined contribution...

March 5, 2018
Books, Labor Market, Pension design,
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05Mar

Advice That Sticks : How to give financial advice that people will follow

By Moira Somers The advice is sound; the client seems eager; and then… nothing happens! Too often, this is the experience that financial professionals encounter in their daily work. When good recommendations go unimplemented, clients’ well-being is compromised, opportunities are lost, and the professional relationship grows strained. Advice that Sticks takes aim at the problem of financial non-adherence. Written by a neuropsychologist and financial change expert, this book examines the five main factors that determine whether a client will follow through...

March 5, 2018
Books, Investing, Labor Market
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05Mar

How Persistent Low Expected Returns Alter Optimal Life Cycle Saving, Investment, and Retirement Behavior

By Vanya Horneff, Raimond Maurer & Olivia S. Mitchell This paper explores how an environment of persistent low returns influences saving, investing, and retirement behaviors, as compared to what in the past had been thought of as more “normal” financial conditions. Our calibrated lifecycle dynamic model with realistic tax, minimum distribution, and Social Security benefit rules produces results that agree with observed saving, work, and claiming age behavior of U.S. households. In particular, our model generates a large peak at...

March 5, 2018
Aging, Articles, Investing, Savings, , ,
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February 2018

19Feb

Save More Tomorrow: Practical Behavioral Finance Solutions to Improve 401(k) Plans

By Shlomo Benartzi One of the world’s top experts in behavioral finance offers innovative strategies for improving 401(k) plans. Half of Americans do not have access to a retirement saving plan at their workplace. Of those who do about a third fail to join. And those who do join tend to save too little and often make unwise investment decisions. In short, the 401(k) world is in crisis, and workers need help. Save More Tomorrow provides that help by focusing on the...

February 19, 2018
Books, Pension design, Savings,
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19Feb

How Persistent Low Expected Returns Alter Optimal Life Cycle Saving, Investment, and Retirement Behavior

By Vanya Horneff, Raimond Maurer, Olivia S. Mitchell This paper explores how an environment of persistent low returns influences saving, investing, and retirement behaviors, as compared to what in the past had been thought of as more “normal” financial conditions. Our calibrated lifecycle dynamic model with realistic tax, minimum distribution, and Social Security benefit rules produces results that agree with observed saving, work, and claiming age behavior of U.S. households. In particular, our model generates a large peak at the...

February 19, 2018
Articles, Investing, Savings, , ,
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12Feb

Overcoming the Saving Slump: How to Increase the Effectiveness of Financial Education and Saving Programs

By Annamaria Lusardi The great majority of working Americans are unprepared to face the difficult task of planning for retirement. In fact, the personal savings rate has been holding steady at zero for several years, down from 8 percent in the mid-1980s. Overcoming the Saving Slump explores the many challenges facing workers in the transition from a traditional defined benefit pension system to one that requires more individual responsibility, analyzing the considerable impediments to saving and evaluating financial literacy programs...

February 12, 2018
Books, Savings, , ,
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