scholarly journals The financial feasibility of delaying Social Security: evidence from administrative tax data

2017 ◽  
Vol 17 (4) ◽  
pp. 419-436 ◽  
Author(s):  
GOPI SHAH GODA ◽  
SHANTHI RAMNATH ◽  
JOHN B. SHOVEN ◽  
SITA NATARAJ SLAVOV
Keyword(s):  
Social Security ◽  
Retirement Age ◽  
Retirement Savings ◽  
Financial Assets ◽  
Individual Retirement Accounts ◽  
Savings Accounts ◽  
Retirement Accounts ◽  
Social Security Benefits ◽  
The Relationship ◽  
Retirement Study

AbstractDespite the large and growing returns to deferring Social Security benefits, most individuals claim Social Security before the full retirement age. In this paper, we use a panel of administrative tax data on individuals likely to financially benefit from delaying Social Security claiming to explore the relationship between Social Security claiming and distributions from tax-advantaged retirement savings accounts. We find that the majority of our sample claim Social Security prior to taking distributions from Individual Retirement Accounts (IRAs). We also find that a third of our sample have IRA balances equivalent to at least two additional years of Social Security benefits, and a quarter have IRA balances equivalent to at least 4 years of Social Security benefits. We complement our analysis with data from the Health and Retirement Study and find that these percentages are considerably higher when other financial assets are taken into account.

scholarly journals Can Information Change Personal Retirement Savings? Evidence from Social Security Benefits Statement Mailings

2018 ◽  
Vol 108 ◽  
pp. 93-97 ◽  
Author(s):  
Susan Payne Carter ◽  
William Skimmyhorn
Keyword(s):  
Social Security ◽  
Retirement Savings ◽  
Natural Experiments ◽  
Social Security Administration ◽  
Retirement Benefits ◽  
Retirement Accounts ◽  
The Us ◽  
Social Security Benefits ◽  
Information Change ◽  
The Impact

Despite concern about the viability of public retirement programs and potential undersaving for retirement, we still know little about the impact of government provided information on individual behavior. We exploit plausibly exogenous variation in exposure to the world's largest personalized retirement benefits statement from the US Social Security Administration to evaluate the effects of information and encouragement on individual retirement savings decisions. Using three natural experiments between 2011 and 2014 and administrative data, we find no impact of the statements on individual retirement savings in their employer provided retirement accounts.

scholarly journals Active vs. Passive Decisions and Crowd-Out in Retirement Savings Accounts: Evidence from Denmark *

2014 ◽  
Vol 129 (3) ◽  
pp. 1141-1219 ◽  
Author(s):  
Raj Chetty ◽  
John N. Friedman ◽  
Søren Leth-Petersen ◽  
Torben Heien Nielsen ◽  
Tore Olsen
Keyword(s):  
Government Expenditure ◽  
Wealth Accumulation ◽  
Retirement Savings ◽  
Total Saving ◽  
Savings Accounts ◽  
Retirement Accounts ◽  
Tax Subsidies ◽  
Crowd Out ◽  
Savings Rates

Abstract Using 41 million observations on savings for the population of Denmark, we show that the effects of retirement savings policies on wealth accumulation depend on whether they change savings rates by active or passive choice. Subsidies for retirement accounts, which rely on individuals to take an action to raise savings, primarily induce individuals to shift assets from taxable accounts to retirement accounts. We estimate that each $1 of government expenditure on subsidies increases total saving by only 1 cent. In contrast, policies that raise retirement contributions if individuals take no action—such as automatic employer contributions to retirement accounts—increase wealth accumulation substantially. We estimate that approximately 15% of individuals are “active savers” who respond to tax subsidies primarily by shifting assets across accounts; 85% of individuals are “passive savers” who are unresponsive to subsidies but are instead heavily influenced by automatic contributions made on their behalf. Active savers tend to be wealthier and more financially sophisticated. We conclude that automatic contributions are more effective at increasing savings rates than subsidies for three reasons: (i) subsidies induce relatively few individuals to respond, (ii) they generate substantial crowd-out conditional on response, and (iii) they do not increase the savings of passive individuals, who are least prepared for retirement.

scholarly journals How To Invest Your IRAs In Profitable Real Estate IRAs

2011 ◽  
Vol 2 (11) ◽  
Author(s):  
Raj Kiani ◽  
M.A. Sangeladji
Keyword(s):  
Real Estate ◽  
Interest Rates ◽  
Retirement Savings ◽  
Sharp Decline ◽  
The Public ◽  
Individual Retirement Accounts ◽  
The Past ◽  
Retirement Accounts ◽  
Roth Ira ◽  
Investment Advisers

Since the inception of Individual Retirement Accounts (IRAs) in 1974, the public has been advised strongly by bankers, accountants (CPAs), and investment advisors that the best strategy for IRA holdings is investment in stocks or bonds.  Unfortunately, with the sharp decline in the market value of stocks and the bottoming out of interest rates in the past years, most IRA funds have performed very poorly and investors have witnessed how drastically their retirement savings lost their accumulated value.  During these years, apparently, not many investment advisers have bothered to consider other alternative ways for investing accumulated IRAs and pension funds.  There is, in fact, another viable investment alternative that offers both safety and a considerable growth rate.  That is real estate IRAs.  The purpose of this paper is to explain (a) why the traditional and Roth IRA should be invested in real estate, b) the steps involved in establishing a sound real estate IRA, (c) the restrictions and the dos and don’ts of investing in a real estate IRA, and (d) the tax and penalty consequences of incorrect investment in a real estate IRA.

scholarly journals Older peoples' willingness to delay social security claiming

2020 ◽  
pp. 1-16
Author(s):  
Raimond Maurer ◽  
Olivia S. Mitchell
Keyword(s):  
Social Security ◽  
Older Persons ◽  
Current System ◽  
Work Requirement ◽  
Lump Sum ◽  
Average Household Income ◽  
Time Work ◽  
Part Time ◽  
Social Security Benefits ◽  
Retirement Study

Abstract We have designed and implemented an experimental module in the 2014 Health and Retirement Study to measure older persons' willingness to defer claiming of Social Security benefits. Under the current system’ status quo where delaying claiming boosts eventual benefits, we show that 46% of the respondents would delay claiming and work longer. If respondents were instead offered an actuarially fair lump sum payment instead of higher lifelong benefits, about 56% indicate they would delay claiming. Without a work requirement, the average amount needed to induce delayed claiming is only $60,400, while when part-time work is stipulated, the amount is slightly higher, $66,700. This small difference implies a low utility value of leisure foregone, of under 20% of average household income.

Optimal Retirement Policies with Present-Biased Agents

2020 ◽  
Author(s):  
Pei Cheng Yu
Keyword(s):  
Private Information ◽  
Hyperbolic Discounting ◽  
Time Inconsistency ◽  
Retirement Savings ◽  
Present Bias ◽  
Optimal Mechanism ◽  
Savings Accounts ◽  
The Government ◽  
Social Security Benefits ◽  
Retirement Policies

Abstract This paper incorporates quasi–hyperbolic discounting into a Mirrlees taxation model to study the design of retirement policies for present-biased agents. I show that the government can improve the screening of productivity by exploiting time inconsistency. This is done by providing commitment to sophisticated agents and taking advantage of the incorrect beliefs of naïve agents. This can be achieved even if the degrees of present bias and sophistication are private information. I also demonstrate how the government can implement the optimal mechanism using retirement savings accounts and social security benefits.

Book Reviews

2010 ◽  
Vol 48 (4) ◽  
pp. 1038-1039
Keyword(s):  
The United States ◽  
Retirement Savings ◽  
Behavioral Strategies ◽  
Yale University ◽  
Individual Retirement Accounts ◽  
The United Kingdom ◽  
Retirement Accounts ◽  
Lifetime Income ◽  
Retirement Security

James J. Choi of Yale University reviews “Automatic: Changing the Way America Saves” by William G. Gale, J. Mark Iwry, David C. John, Lina Walker,. The EconLit Abstract of the reviewed work begins “Nine papers explore methods of making the U.S. system of 401(k)-type plans and Individual Retirement Accounts more effective. Papers discuss retirement saving for middle- and lower-income households--the Pension Protection Act of 2006 and the unfinished agenda (William G. Gale, J. Mark Iwry, and Spencer Walters); the automatic 401(k)--revenue and distributional estimates (Christopher Geissler and Benjamin H. Harris); pursuing universal retirement security through automatic IRAs (Iwry and David C. John); national retirement savings systems in Australia, Chile, New Zealand, and the United Kingdom--lessons for the United States (John and Ruth Levine); increasing annuitization in 401(k) plans with automatic trial income (Gale, Iwry, John, and Lina Walker); automatic annuitization--new behavioral strategies for expanding lifetime income in 401(k)s (Iwry and John A. Turner); retirement security for Latinos--bolstering coverage, savings, and adequacy (Peter R. Orszag and Eric Rodriguez); retirement security for women--progress to date and policies for tomorrow (Leslie E. Papke, Walker, and Michael Dworsky); and strategies to increase the retirement savings of African American households (Ngina Chiteji and Walker). Gale is Arjay and Frances Miller Chair in Federal Economic Policy at the Brookings Institution and Director of the Retirement Security Project. Iwry is Senior Adviser to the Secretary and Deputy Assistant Secretary for… Index.”

scholarly journals Proposals to Restructure Social Security

1996 ◽  
Vol 10 (3) ◽  
pp. 67-88 ◽  
Author(s):  
Peter A Diamond
Keyword(s):  
Life Expectancy ◽  
Social Security ◽  
European Countries ◽  
Retirement Age ◽  
Retirement Savings ◽  
Partial Privatization ◽  
Trust Funds

This paper discusses five proposed changes in Social Security: indexing the normal retirement age to life expectancy (as Sweden is doing); investing part of the trust funds in private securities; partial privatization (as has been proposed by Senators Kerrey and Simpson, Sweden is doing and Mexico has done); replacing Social Security by individually mandated savings (as was done in Chile in 1981); and mandating employer provided retirement savings (as recently legislated in Australia and is effectively the case in some European countries.) The economics of Social Security and the politics of restoring (and preserving) actuarial balance are discussed.

scholarly journals Tips For Maximizing The Value Of Your Retirement Investment Portfolio

2011 ◽  
Vol 3 (12) ◽  
Author(s):  
Neal R. VanZante ◽  
George R. Wagman ◽  
Ralph B. Fritzsch
Keyword(s):  
Social Security ◽  
Investment Strategy ◽  
Retirement Age ◽  
Font Size ◽  
Investment Portfolio ◽  
Retirement Accounts ◽  
Retirement Investment

<p style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-family: &quot;Times New Roman&quot;,&quot;serif&quot;; font-size: 10pt;" lang="PT">Recent studies suggest that many retired and near-retirement age individuals do not understand basic investment strategy.<span style="mso-spacerun: yes;">&nbsp; </span>One study concludes that &ldquo;Boomers are in a state of financial paralysis&rdquo; (Guardian Life, 2004).<span style="mso-spacerun: yes;">&nbsp; </span>This article provides tips about which types of securities to include in various retirement accounts to maximize the value of the retirement portfolio.<span style="mso-spacerun: yes;">&nbsp; </span>The article also considers social security and its possible effect on retirement investment strategy.</span></p>

scholarly journals LA SEGURIDAD SOCIAL: ANÁLISIS DE SU PROBLEMÁTICA Y PROPUESTAS DE MEJORA

2014 ◽  
Vol 18 (51) ◽  
pp. 83-92
Author(s):  
Juan Manuel Izar Landeta ◽  
Carmen Berenice Ynzunza Cortés
Keyword(s):  
Social Security ◽  
Financial Management ◽  
Retirement Age ◽  
Flexible Retirement ◽  
Retirement Accounts ◽  
The World ◽  
Social Security Programs ◽  
Practical Recommendations

RESUMEN El número creciente de trabajadores a punto de retirarse presenta un problema serio para los sistemas de seguridad social en todo el mundo. Esto debido a que se estima que dichos programas se verán faltos de fondos en los próximos años. Este ensayo comenta algunas de las variables más importantes relacionadas con esta temática. Estas incluyen la edad de retiro, el manejo financiero de las cuentas de retiro y esquemas flexibles de jubilación, entre otros. También se incluyen algunas recomendaciones prácticas para solventar este problema. ABSTRACT The increasing number of workers approaching retirement age poses a challenge to social security programs all around the world. This is because these programs are projected to get underfunded in the coming years. This essay comments some of the most important variables involved in such an important topic. These include retirement age, financial management of retirement accounts and flexible retirement schemes, amongst others. Several practical recommendations to solve this problem are included.

Why are US men retiring later?

2018 ◽  
Vol 19 (3) ◽  
pp. 442-457
Author(s):  
Wenliang Hou ◽  
Alicia Munnell ◽  
Geoffrey Todd Sanzenbacher ◽  
Yinji Li
Keyword(s):  
Social Security ◽  
Structural Model ◽  
Retirement Age ◽  
Defined Benefit ◽  
Defined Contribution ◽  
Retirement Plans ◽  
Original Cohort ◽  
The Past ◽  
Retirement Timing ◽  
Retirement Study

AbstractOver the past two decades, the share of individuals claiming Social Security at the Early Eligibility Age has dropped and the average retirement age has increased. At the same time, Social Security rules have changed substantially, employer-sponsored retirement plans have shifted from defined benefit (DB) to defined contribution (DC), health has improved, and mortality has decreased. In theory, all of these changes could lead to a trend toward later claiming. Disentangling the effect of any one change is difficult because they have been occurring simultaneously. This paper uses the Gustman and Steinmeier structural model of retirement timing to investigate which of these changes matter most by simulating their effects on the original cohort (1931–1941) of the Health and Retirement Study (HRS). The predicted behavior is then compared with the actual retirements of the Early Boomer cohort (1948–1953) to see how much of the later cohort's delayed claiming and retirement can be explained by these changes. The Early Boomer cohort was less likely to be fully retired than the HRS cohort at both age 62 (36.7% vs. 44.0%) and age 64 (49.5% vs. 53.9%). The model suggests that the shift from DB toward DC plans was the biggest contributor to these declines, followed by better health. Social Security rules and improvements in mortality played smaller roles.

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