Bernhard Ebbinghaus
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780199286119
- eISBN:
- 9780191604089
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199286116.003.0007
- Subject:
- Political Science, Comparative Politics
Governments have realized the negative impact of early retirement on social expenditures and labor costs, responding with a paradigm shift away from passive labor market policies. Governments seek to ...
More
Governments have realized the negative impact of early retirement on social expenditures and labor costs, responding with a paradigm shift away from passive labor market policies. Governments seek to reverse early exit by raising the retirement age in pension systems, reforming disability insurance, closing special early retirement programs, activating older workers, and fostering gradual transitions to retirement. These reforms met many obstacles given the entrenched multiple pathways and status quo defense of the social partners, particularly as benefits came to be viewed as acquired rights.Less
Governments have realized the negative impact of early retirement on social expenditures and labor costs, responding with a paradigm shift away from passive labor market policies. Governments seek to reverse early exit by raising the retirement age in pension systems, reforming disability insurance, closing special early retirement programs, activating older workers, and fostering gradual transitions to retirement. These reforms met many obstacles given the entrenched multiple pathways and status quo defense of the social partners, particularly as benefits came to be viewed as acquired rights.
Bernhard Ebbinghaus
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780199286119
- eISBN:
- 9780191604089
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199286116.003.0004
- Subject:
- Political Science, Comparative Politics
The chapter analyzes the main trends and cross-national variations in early exit from work for eight European countries, Japan, and the USA. Participation levels and employment rates of older workers ...
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The chapter analyzes the main trends and cross-national variations in early exit from work for eight European countries, Japan, and the USA. Participation levels and employment rates of older workers between age 55 and 64 have declined. Cohort-adjusted early exit rates for both men and women show not only a rise in early retirement over the 1970s and early 1980s, but also substantial cross-national differences. Early exit from work is widespread in Continental Europe, less so in Scandinavia, Anglophone market economies, and in Japan.Less
The chapter analyzes the main trends and cross-national variations in early exit from work for eight European countries, Japan, and the USA. Participation levels and employment rates of older workers between age 55 and 64 have declined. Cohort-adjusted early exit rates for both men and women show not only a rise in early retirement over the 1970s and early 1980s, but also substantial cross-national differences. Early exit from work is widespread in Continental Europe, less so in Scandinavia, Anglophone market economies, and in Japan.
Bernhard Ebbinghaus
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780199286119
- eISBN:
- 9780191604089
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199286116.003.0005
- Subject:
- Political Science, Comparative Politics
There are multiple pathways to early exit from work: early pensions (retirement age before 65), flexible and partial pensions, special preretirement schemes, long-term unemployment benefits, and ...
More
There are multiple pathways to early exit from work: early pensions (retirement age before 65), flexible and partial pensions, special preretirement schemes, long-term unemployment benefits, and disability pensions. Early exit from work often emerged as an unintended consequence of progressive social policies. But once institutionalized, these exit pathways were difficult to reform, particularly in Continental European welfare states. In contrast, fewer and less generous pathways exist in Scandinavia, Anglophone economies, and Japan.Less
There are multiple pathways to early exit from work: early pensions (retirement age before 65), flexible and partial pensions, special preretirement schemes, long-term unemployment benefits, and disability pensions. Early exit from work often emerged as an unintended consequence of progressive social policies. But once institutionalized, these exit pathways were difficult to reform, particularly in Continental European welfare states. In contrast, fewer and less generous pathways exist in Scandinavia, Anglophone economies, and Japan.
Bernhard Ebbinghaus
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780199286119
- eISBN:
- 9780191604089
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199286116.001.0001
- Subject:
- Political Science, Comparative Politics
Since the 1970s, early exit from work has become a major challenge in modern welfare states. Governments, employers, and unions alike once thought of early retirement as a peaceful solution to the ...
More
Since the 1970s, early exit from work has become a major challenge in modern welfare states. Governments, employers, and unions alike once thought of early retirement as a peaceful solution to the economic problems of mass unemployment and industrial restructuring. Today, governments and international organizations advocate the postponement of retirement and an increase in activity among older workers. Comparing eight European countries, the USA, and Japan, this book demonstrates significant cross-national differences in early retirement across countries and over time. The study evaluates the impact of major variations in welfare regimes, production systems, and labor relations. It stresses the importance of the ‘pull factor’ of extensive welfare state provisions, particularly in Continental Europe; the ‘push factor’ of labor shedding strategies by firms, particularly in Anglo-American market economies; and the role of employers and worker representatives in negotiating retirement policies, particularly in coordinated market economies. Over the last three decades, early retirement has become a popular social policy and employment practice in the workplace, adding to the fiscal crises and employment problems of today’s welfare states. Attempts to reverse early retirement policies have led to major reform debates. Unilateral government policies to cut back on social benefits have not had the expected employment results due to resistance from employers, workers, and their organizations. Successful reforms require the cooperation of both sides. This study provides comprehensive empirical analyses and a balanced approach to both the pull and the push factors needed to understand the development of early retirement regimes.Less
Since the 1970s, early exit from work has become a major challenge in modern welfare states. Governments, employers, and unions alike once thought of early retirement as a peaceful solution to the economic problems of mass unemployment and industrial restructuring. Today, governments and international organizations advocate the postponement of retirement and an increase in activity among older workers. Comparing eight European countries, the USA, and Japan, this book demonstrates significant cross-national differences in early retirement across countries and over time. The study evaluates the impact of major variations in welfare regimes, production systems, and labor relations. It stresses the importance of the ‘pull factor’ of extensive welfare state provisions, particularly in Continental Europe; the ‘push factor’ of labor shedding strategies by firms, particularly in Anglo-American market economies; and the role of employers and worker representatives in negotiating retirement policies, particularly in coordinated market economies. Over the last three decades, early retirement has become a popular social policy and employment practice in the workplace, adding to the fiscal crises and employment problems of today’s welfare states. Attempts to reverse early retirement policies have led to major reform debates. Unilateral government policies to cut back on social benefits have not had the expected employment results due to resistance from employers, workers, and their organizations. Successful reforms require the cooperation of both sides. This study provides comprehensive empirical analyses and a balanced approach to both the pull and the push factors needed to understand the development of early retirement regimes.
Toni Hustead
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199573349
- eISBN:
- 9780191721946
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199573349.003.0008
- Subject:
- Business and Management, Public Management, Pensions and Pension Management
Most US federal retirement plans are now fully funded, but since plan assets must legally be invested in federal securities, fund surpluses are used to reduce overall federal budget deficits. As a ...
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Most US federal retirement plans are now fully funded, but since plan assets must legally be invested in federal securities, fund surpluses are used to reduce overall federal budget deficits. As a result, current taxpayers are not charged with the cost of future federal retirement obligations. Nevertheless, federal rules do require the employing federal agency to budget for current personnel’s accruing liability of retirement promises. Therefore, policy decisions regarding the number of federal civilian and military personnel and the design of their retirement benefits may be made with a better understanding of the costs.Less
Most US federal retirement plans are now fully funded, but since plan assets must legally be invested in federal securities, fund surpluses are used to reduce overall federal budget deficits. As a result, current taxpayers are not charged with the cost of future federal retirement obligations. Nevertheless, federal rules do require the employing federal agency to budget for current personnel’s accruing liability of retirement promises. Therefore, policy decisions regarding the number of federal civilian and military personnel and the design of their retirement benefits may be made with a better understanding of the costs.
Bernhard Ebbinghaus
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780199286119
- eISBN:
- 9780191604089
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199286116.003.0001
- Subject:
- Political Science, Comparative Politics
Early retirement has become a major issue of current welfare state reforms in aging societies. This introductory chapter discusses the different protection-oriented ‘pull’ and production-oriented ...
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Early retirement has become a major issue of current welfare state reforms in aging societies. This introductory chapter discusses the different protection-oriented ‘pull’ and production-oriented ‘push’ factors that caused more early exit from work prior to age 65. It argues for systematic comparison of welfare regimes, production systems, and labor relations, as well as the study of the key role of social partners in institutional change.Less
Early retirement has become a major issue of current welfare state reforms in aging societies. This introductory chapter discusses the different protection-oriented ‘pull’ and production-oriented ‘push’ factors that caused more early exit from work prior to age 65. It argues for systematic comparison of welfare regimes, production systems, and labor relations, as well as the study of the key role of social partners in institutional change.
Bernhard Ebbinghaus
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780199286119
- eISBN:
- 9780191604089
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199286116.003.0002
- Subject:
- Political Science, Comparative Politics
The chapter discusses how the state, employers, and organized labor promote and reform early retirement policies. What interests do workers, employers, and workplace representatives have in using ...
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The chapter discusses how the state, employers, and organized labor promote and reform early retirement policies. What interests do workers, employers, and workplace representatives have in using early exit? Beyond the workplace, interest coalitions may arise among governments, employer associations, and trade unions to externalize restructuration costs, reduce labor supply, and buy social peace.Less
The chapter discusses how the state, employers, and organized labor promote and reform early retirement policies. What interests do workers, employers, and workplace representatives have in using early exit? Beyond the workplace, interest coalitions may arise among governments, employer associations, and trade unions to externalize restructuration costs, reduce labor supply, and buy social peace.
Bernhard Ebbinghaus
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780199286119
- eISBN:
- 9780191604089
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199286116.003.0006
- Subject:
- Political Science, Comparative Politics
This chapter analyzes the economic ‘push’ factors that lead to early exit from work. Some firms co-sponsor early retirement via occupational pensions in order to facilitate restructuring. ...
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This chapter analyzes the economic ‘push’ factors that lead to early exit from work. Some firms co-sponsor early retirement via occupational pensions in order to facilitate restructuring. Deindustrialization, mass unemployment, and privatization have increased structural push, with early exit spreading widely across sectors. Two varieties of capitalism can be observed: early exit is used by firms to adapt to regulated labor markets in Continental coordinated market economies, it is more cyclical and infrequent in Anglophone flexible labor markets, while Japan and Sweden are exceptional cases that integrate older workers.Less
This chapter analyzes the economic ‘push’ factors that lead to early exit from work. Some firms co-sponsor early retirement via occupational pensions in order to facilitate restructuring. Deindustrialization, mass unemployment, and privatization have increased structural push, with early exit spreading widely across sectors. Two varieties of capitalism can be observed: early exit is used by firms to adapt to regulated labor markets in Continental coordinated market economies, it is more cyclical and infrequent in Anglophone flexible labor markets, while Japan and Sweden are exceptional cases that integrate older workers.
Bernhard Ebbinghaus
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780199286119
- eISBN:
- 9780191604089
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199286116.003.0008
- Subject:
- Political Science, Comparative Politics
This concluding chapter summarizes the main findings of the book, evaluating the protection-oriented ‘pull’ and production-oriented ‘push’ approaches to explain the long-term development and ...
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This concluding chapter summarizes the main findings of the book, evaluating the protection-oriented ‘pull’ and production-oriented ‘push’ approaches to explain the long-term development and cross-national variations in early exit from work. It discusses the difficulties of ‘path dependence’ as well as the opportunities of institutional change to reverse early retirement policies. It recommends a paradigm shift away from early retirement in combination with integration policies that facilitate older workers to remain active.Less
This concluding chapter summarizes the main findings of the book, evaluating the protection-oriented ‘pull’ and production-oriented ‘push’ approaches to explain the long-term development and cross-national variations in early exit from work. It discusses the difficulties of ‘path dependence’ as well as the opportunities of institutional change to reverse early retirement policies. It recommends a paradigm shift away from early retirement in combination with integration policies that facilitate older workers to remain active.
David Blitzstein, Olivia S. Mitchell, and Stephen P. Utkus (eds)
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780199204656
- eISBN:
- 9780191603822
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199204659.001.0001
- Subject:
- Economics and Finance, Financial Economics
This book posits that retirement security is the central policy concern of our time. A generation of ‘Baby Boomers’ is on the verge of retirement, yet pension systems confront crushing challenges, ...
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This book posits that retirement security is the central policy concern of our time. A generation of ‘Baby Boomers’ is on the verge of retirement, yet pension systems confront crushing challenges, and governments often appear confused about which direction they should move in. The book addresses the question: ‘What are the new risks and rewards in pensions, and what paths can stakeholders chose to solve these problems?’ In doing so, it explores three aspects of the evolution of risk and reward-sharing in retirement in order to offer guidance to pension fiduciaries, plan participants, and policymakers. First, it focuses on new perspectives for assessing retirement risks and rewards. Second, it evaluates efforts to insure retirement plans. Lastly, it provides several new strategies for managing retirement system risk.Less
This book posits that retirement security is the central policy concern of our time. A generation of ‘Baby Boomers’ is on the verge of retirement, yet pension systems confront crushing challenges, and governments often appear confused about which direction they should move in. The book addresses the question: ‘What are the new risks and rewards in pensions, and what paths can stakeholders chose to solve these problems?’ In doing so, it explores three aspects of the evolution of risk and reward-sharing in retirement in order to offer guidance to pension fiduciaries, plan participants, and policymakers. First, it focuses on new perspectives for assessing retirement risks and rewards. Second, it evaluates efforts to insure retirement plans. Lastly, it provides several new strategies for managing retirement system risk.
Robert L. Clark and Olivia S. Mitchell (eds)
- Published in print:
- 2010
- Published Online:
- September 2010
- ISBN:
- 9780199592609
- eISBN:
- 9780191594618
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199592609.001.0001
- Subject:
- Business and Management, Pensions and Pension Management
Retirement risk management must be dramatically overhauled if workers and retirees are to better prepare themselves to meet future retirement challenges. Recent economic events including the global ...
More
Retirement risk management must be dramatically overhauled if workers and retirees are to better prepare themselves to meet future retirement challenges. Recent economic events including the global financial crisis have upended expectations about what pension and endowment fund managers can do. Employers and employees have found it difficult to make pension contributions, despite drops in retirement plan funding. In many countries, government social security systems are also facing insolvency. These factors, coupled with an aging population and rising longevity, are giving rise to serious questions about the future of retirement in America and around the world. This volume explores how workers and firms can reassess the risks associated with retirement saving and dissaving, to identify creative adjustments to adapt to these new risks and realities. One area explored is the key role for financial literacy and education programs. In addition, those acting as plan sponsors and fiduciaries must reconsider pension design to help them better address the new realities. Also novel financial products are described that can help retirement plan financing innovate. Experts provide new research and offer policy recommendations, illustrating how retirement plans can be amended to better meet the retirement needs of workers and firms. This volume will be a welcome addition to the libraries of everyone focused on retirement security.Less
Retirement risk management must be dramatically overhauled if workers and retirees are to better prepare themselves to meet future retirement challenges. Recent economic events including the global financial crisis have upended expectations about what pension and endowment fund managers can do. Employers and employees have found it difficult to make pension contributions, despite drops in retirement plan funding. In many countries, government social security systems are also facing insolvency. These factors, coupled with an aging population and rising longevity, are giving rise to serious questions about the future of retirement in America and around the world. This volume explores how workers and firms can reassess the risks associated with retirement saving and dissaving, to identify creative adjustments to adapt to these new risks and realities. One area explored is the key role for financial literacy and education programs. In addition, those acting as plan sponsors and fiduciaries must reconsider pension design to help them better address the new realities. Also novel financial products are described that can help retirement plan financing innovate. Experts provide new research and offer policy recommendations, illustrating how retirement plans can be amended to better meet the retirement needs of workers and firms. This volume will be a welcome addition to the libraries of everyone focused on retirement security.
David Blitzstein, Olivia S. Mitchell, and Stephen P. Utkus
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780199204656
- eISBN:
- 9780191603822
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199204659.003.0001
- Subject:
- Economics and Finance, Financial Economics
An aging-population tsunami is sweeping the world, and capital markets have buffeted pension plans while retiree healthcare care costs rise without letup. This coincidence of shocks marks a crucial ...
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An aging-population tsunami is sweeping the world, and capital markets have buffeted pension plans while retiree healthcare care costs rise without letup. This coincidence of shocks marks a crucial moment for global retirement security, since public and private retirement systems everywhere have fared poorly just as the massive Baby Boom generation moves into retirement. Clearly, urgent efforts are needed to enhance risk management for public and private pension systems around the world. This book explores three aspects of the evolution of risk and reward-sharing in retirement to offer guidance to pension fiduciaries, plan participants, and policymakers. First, it focuses on new perspectives for assessing retirement risks and rewards. Second, it evaluates efforts to insure retirement plans. Lastly, it provides several new strategies for managing retirement system risk. This chapter previews the remarkable findings by contributors to this volume.Less
An aging-population tsunami is sweeping the world, and capital markets have buffeted pension plans while retiree healthcare care costs rise without letup. This coincidence of shocks marks a crucial moment for global retirement security, since public and private retirement systems everywhere have fared poorly just as the massive Baby Boom generation moves into retirement. Clearly, urgent efforts are needed to enhance risk management for public and private pension systems around the world. This book explores three aspects of the evolution of risk and reward-sharing in retirement to offer guidance to pension fiduciaries, plan participants, and policymakers. First, it focuses on new perspectives for assessing retirement risks and rewards. Second, it evaluates efforts to insure retirement plans. Lastly, it provides several new strategies for managing retirement system risk. This chapter previews the remarkable findings by contributors to this volume.
Sarah Holden and Jack VanDerhei
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780199204656
- eISBN:
- 9780191603822
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199204659.003.0003
- Subject:
- Economics and Finance, Financial Economics
As defined contribution plans are increasingly being offered as the primary employer-sponsored pension, it is of interest to ask whether these accumulations are likely to yield sufficient retirement ...
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As defined contribution plans are increasingly being offered as the primary employer-sponsored pension, it is of interest to ask whether these accumulations are likely to yield sufficient retirement income. This chapter uses a projection model to explore alternative future scenarios for retirees who had 401(k) plans available to them over their full working careers. It also assesses the impact of ‘catch-up’ contributions, saving through an individual retirement account when an employer does not offer a 401(k) plan, and changing retirement ages.Less
As defined contribution plans are increasingly being offered as the primary employer-sponsored pension, it is of interest to ask whether these accumulations are likely to yield sufficient retirement income. This chapter uses a projection model to explore alternative future scenarios for retirees who had 401(k) plans available to them over their full working careers. It also assesses the impact of ‘catch-up’ contributions, saving through an individual retirement account when an employer does not offer a 401(k) plan, and changing retirement ages.
John Ameriks and Olivia S. Mitchell
- Published in print:
- 2008
- Published Online:
- January 2009
- ISBN:
- 9780199549108
- eISBN:
- 9780191720734
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199549108.003.0001
- Subject:
- Business and Management, Pensions and Pension Management
As Baby Boomers move into their 60s, they are focusing policymaker and media attention on how their generation will manage the retirement phase of their lifetime. This book acknowledges that many, ...
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As Baby Boomers move into their 60s, they are focusing policymaker and media attention on how their generation will manage the retirement phase of their lifetime. This book acknowledges that many, though not all, in this older cohort have accumulated substantial assets, so for them, the question is what will they do with what they have? It provides a detailed exploration of how people entering retirement will deploy their accumulated assets in the near and long term, so to best meet their myriad spending, investment, and other objectives.Less
As Baby Boomers move into their 60s, they are focusing policymaker and media attention on how their generation will manage the retirement phase of their lifetime. This book acknowledges that many, though not all, in this older cohort have accumulated substantial assets, so for them, the question is what will they do with what they have? It provides a detailed exploration of how people entering retirement will deploy their accumulated assets in the near and long term, so to best meet their myriad spending, investment, and other objectives.
Sewin Chan and Ann Huff Stevens
- Published in print:
- 2008
- Published Online:
- January 2009
- ISBN:
- 9780199549108
- eISBN:
- 9780191720734
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199549108.003.0002
- Subject:
- Business and Management, Pensions and Pension Management
This chapter investigates non-traditional work and retirement patterns among older individuals in the Health and Retirement Study. It first reviews the evidence on retirements that initially involve ...
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This chapter investigates non-traditional work and retirement patterns among older individuals in the Health and Retirement Study. It first reviews the evidence on retirements that initially involve bridge jobs or some form of partial retirement. It then looks at analysis on retirement reversals in which individuals resume or increase work activity following a period of retirement. Almost one third of the individuals in the sample who are ever partially or fully retired make at least one transition from more to less retired during the period of observation. The chapter also explores the characteristics of individuals making such transitions.Less
This chapter investigates non-traditional work and retirement patterns among older individuals in the Health and Retirement Study. It first reviews the evidence on retirements that initially involve bridge jobs or some form of partial retirement. It then looks at analysis on retirement reversals in which individuals resume or increase work activity following a period of retirement. Almost one third of the individuals in the sample who are ever partially or fully retired make at least one transition from more to less retired during the period of observation. The chapter also explores the characteristics of individuals making such transitions.
William F. Sharpe, Jason S. Scott, and John G. Watson
- Published in print:
- 2008
- Published Online:
- January 2009
- ISBN:
- 9780199549108
- eISBN:
- 9780191720734
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199549108.003.0009
- Subject:
- Business and Management, Pensions and Pension Management
Today's retirees face the daunting task of determining appropriate investment and spending strategies for their accumulated savings. Financial economists have addressed their problem using an ...
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Today's retirees face the daunting task of determining appropriate investment and spending strategies for their accumulated savings. Financial economists have addressed their problem using an expected utility framework. In contrast, many financial advisors rely instead on rules of thumb. This chapter shows that some of the popular rules are inconsistent with expected utility maximization, since they subject retirees to avoidable, non-market risk. It also highlights the importance of earmarking ‘the existence of a one-to-one correspondence between investments and future spending’ and shows that a natural way to implement earmarking is to create a lockbox strategy.Less
Today's retirees face the daunting task of determining appropriate investment and spending strategies for their accumulated savings. Financial economists have addressed their problem using an expected utility framework. In contrast, many financial advisors rely instead on rules of thumb. This chapter shows that some of the popular rules are inconsistent with expected utility maximization, since they subject retirees to avoidable, non-market risk. It also highlights the importance of earmarking ‘the existence of a one-to-one correspondence between investments and future spending’ and shows that a natural way to implement earmarking is to create a lockbox strategy.
Edward A. Zelinsky
- Published in print:
- 2008
- Published Online:
- January 2009
- ISBN:
- 9780195339352
- eISBN:
- 9780199855407
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195339352.001.0001
- Subject:
- Law, Employment Law
President Bush's vision of an “ownership society” continues the process of the last three decades by which the defined contribution paradigm has become the primary framework for retirement savings ...
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President Bush's vision of an “ownership society” continues the process of the last three decades by which the defined contribution paradigm has become the primary framework for retirement savings and, more broadly, a fundamental tenet of tax and social policy. In a defined contribution society, the policies more likely to be adopted are those which channel government subsidies for retirement, health care, and educational savings through individual accounts controlled by the taxpayer himself. In contrast, defined benefit arrangements—as exemplified by the traditional pension plan and the federal Social Security system—are less likely to be proposed, adopted or expanded. Individual retirement accounts (IRAs) and 401(k) arrangements are today central features of American life. The growth of cash balance pensions and their cousins—new comparability plans—is best understood as reflecting the prevailing defined contribution ethos. Equally striking is the extent to which the defined contribution format has, in the last several years, reconfigured many state retirement programs. Moreover, individual accounts have spread beyond the realm of retirement savings to other arenas of social and tax policy. Section 529 accounts are today the predominant instrument by which Americans save for college. We are now in the early stages of a comparable transformation of medical coverage—the flexible spending account (FSA), the health reimbursement arrangement (HRA), and the health savings account (HSA) emerging as important devices for financing routine medical care.Less
President Bush's vision of an “ownership society” continues the process of the last three decades by which the defined contribution paradigm has become the primary framework for retirement savings and, more broadly, a fundamental tenet of tax and social policy. In a defined contribution society, the policies more likely to be adopted are those which channel government subsidies for retirement, health care, and educational savings through individual accounts controlled by the taxpayer himself. In contrast, defined benefit arrangements—as exemplified by the traditional pension plan and the federal Social Security system—are less likely to be proposed, adopted or expanded. Individual retirement accounts (IRAs) and 401(k) arrangements are today central features of American life. The growth of cash balance pensions and their cousins—new comparability plans—is best understood as reflecting the prevailing defined contribution ethos. Equally striking is the extent to which the defined contribution format has, in the last several years, reconfigured many state retirement programs. Moreover, individual accounts have spread beyond the realm of retirement savings to other arenas of social and tax policy. Section 529 accounts are today the predominant instrument by which Americans save for college. We are now in the early stages of a comparable transformation of medical coverage—the flexible spending account (FSA), the health reimbursement arrangement (HRA), and the health savings account (HSA) emerging as important devices for financing routine medical care.
John Beshears, James J. Choi, David Laibson, and Brigitte C. Madrian
- Published in print:
- 2007
- Published Online:
- January 2008
- ISBN:
- 9780199226801
- eISBN:
- 9780191710285
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199226801.003.0004
- Subject:
- Business and Management, Pensions and Pension Management
If transaction costs are small, standard economic theory would suggest that defaults have little impact on economic outcomes. Agents with well-defined preferences will opt out of any default that ...
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If transaction costs are small, standard economic theory would suggest that defaults have little impact on economic outcomes. Agents with well-defined preferences will opt out of any default that does not maximize their utility, regardless of the nature of the default. In practice, however, defaults can have sizable effects on economic outcomes. This chapter summarizes the empirical evidence on defaults in savings outcomes, which strongly suggests that defaults affect savings outcomes at every step along the way. The different types of US retirement income institutions and some of their salient characteristics are described. Empirical evidence from the USA and other countries, including Chile, Mexico, and Sweden is presented on how defaults influence retirement savings outcomes at all stages of the savings life cycle, including savings plan participation, savings rates, asset allocation, and post-retirement savings distributions. The chapter then examines why defaults have such a tremendous impact on savings outcomes. Finally, it considers the role of public policy toward retirement saving when defaults matter.Less
If transaction costs are small, standard economic theory would suggest that defaults have little impact on economic outcomes. Agents with well-defined preferences will opt out of any default that does not maximize their utility, regardless of the nature of the default. In practice, however, defaults can have sizable effects on economic outcomes. This chapter summarizes the empirical evidence on defaults in savings outcomes, which strongly suggests that defaults affect savings outcomes at every step along the way. The different types of US retirement income institutions and some of their salient characteristics are described. Empirical evidence from the USA and other countries, including Chile, Mexico, and Sweden is presented on how defaults influence retirement savings outcomes at all stages of the savings life cycle, including savings plan participation, savings rates, asset allocation, and post-retirement savings distributions. The chapter then examines why defaults have such a tremendous impact on savings outcomes. Finally, it considers the role of public policy toward retirement saving when defaults matter.
Peter A. Diamond
- Published in print:
- 2002
- Published Online:
- October 2011
- ISBN:
- 9780199247899
- eISBN:
- 9780191697692
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199247899.001.0001
- Subject:
- Economics and Finance, Financial Economics, Public and Welfare
Social security systems are being reviewed and changed in many countries around the world. This book considers some of the key policy issues for design of a social security reform, as well as ...
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Social security systems are being reviewed and changed in many countries around the world. This book considers some of the key policy issues for design of a social security reform, as well as reviewing much of the academic literature on the positive and normative aspects of social security. The first chapter provides an examination of key policy issues of general concern includes the funding of social security, the comparison of defined benefit and defined contribution systems, notional defined contribution accounts, alternative approaches to organizing individual defined contribution accounts, and the provision of survivor benefits. The book then turns to the academic literature on the interactions between social security and the labor and capital markets, providing a non-technical overview of the existing literature and pointing-out gaps in current research findings. The second chapter reviews the impact on retirement decisions of forced savings, the use of an earnings or retirement test, mandated annuitization, recognizing heterogeneity in both life expectancy and possibly in risk classification for annuity pricing, and treatment of the family, particularly the use of joint-life annuitization. Also reviewed is the impact on labor supply at younger ages, considering mandatory savings and annuitization, contrasting defined benefit and defined contribution systems, and analysing alternative approaches to redistribution within social security. The final chapter covers issues of aggregate capital accumulation and risk-sharing, with the latter including the risks in annuitization, in the returns to capital, and in aggregate earnings. Also considered are the risks in the political process.Less
Social security systems are being reviewed and changed in many countries around the world. This book considers some of the key policy issues for design of a social security reform, as well as reviewing much of the academic literature on the positive and normative aspects of social security. The first chapter provides an examination of key policy issues of general concern includes the funding of social security, the comparison of defined benefit and defined contribution systems, notional defined contribution accounts, alternative approaches to organizing individual defined contribution accounts, and the provision of survivor benefits. The book then turns to the academic literature on the interactions between social security and the labor and capital markets, providing a non-technical overview of the existing literature and pointing-out gaps in current research findings. The second chapter reviews the impact on retirement decisions of forced savings, the use of an earnings or retirement test, mandated annuitization, recognizing heterogeneity in both life expectancy and possibly in risk classification for annuity pricing, and treatment of the family, particularly the use of joint-life annuitization. Also reviewed is the impact on labor supply at younger ages, considering mandatory savings and annuitization, contrasting defined benefit and defined contribution systems, and analysing alternative approaches to redistribution within social security. The final chapter covers issues of aggregate capital accumulation and risk-sharing, with the latter including the risks in annuitization, in the returns to capital, and in aggregate earnings. Also considered are the risks in the political process.
Brigitte Madrian, Olivia S. Mitchell, and Beth J. Soldo
- Published in print:
- 2007
- Published Online:
- September 2007
- ISBN:
- 9780199230778
- eISBN:
- 9780191710971
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199230778.003.0002
- Subject:
- Business and Management, Pensions and Pension Management
This chapter compares retirement expectations, retirement patterns, and expectations of future work across different cohorts of the Health and Retirement Study, including the new cohort of Baby ...
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This chapter compares retirement expectations, retirement patterns, and expectations of future work across different cohorts of the Health and Retirement Study, including the new cohort of Baby Boomers currently in their late fifties. The Boomers appear more strongly attached to the labor force as they enter their retirement years than were earlier cohorts at the same age. Compared to the preceding birth cohort, they expect to retire nearly one year later, they are 14% more likely to expect to be working full-time at age 65, and they are 21% more likely to expect to work in the future if they are not currently working. These differences are not entirely explained by cohort differences in socioeconomic status, pension incentives, demographics, or health. In all, Baby Boomers may have stronger preferences for work than previous cohorts.Less
This chapter compares retirement expectations, retirement patterns, and expectations of future work across different cohorts of the Health and Retirement Study, including the new cohort of Baby Boomers currently in their late fifties. The Boomers appear more strongly attached to the labor force as they enter their retirement years than were earlier cohorts at the same age. Compared to the preceding birth cohort, they expect to retire nearly one year later, they are 14% more likely to expect to be working full-time at age 65, and they are 21% more likely to expect to work in the future if they are not currently working. These differences are not entirely explained by cohort differences in socioeconomic status, pension incentives, demographics, or health. In all, Baby Boomers may have stronger preferences for work than previous cohorts.
