What if OregonSaves Went National: A Look at the Impact on Retirement Income Adequacy

2019 ◽  
Author(s):  
Jack VanDerhei
Keyword(s):  
Retirement Income ◽  
Income Adequacy ◽  
The Impact

scholarly journals Immunization Strategies for Funding Multiple Inflation-Linked Retirement Income Benefits

Risks ◽  
2021 ◽  
Vol 9 (4) ◽  
pp. 60
Author(s):  
Cláudia Simões ◽  
Luís Oliveira ◽  
Jorge M. Bravo
Keyword(s):  
Interest Rate ◽  
Yield Curve ◽  
Risk Measure ◽  
Management Strategies ◽  
Interest Rate Risk ◽  
Insurance Companies ◽  
Retirement Income ◽  
Investment Strategies ◽  
Immunization Strategies ◽  
The Impact

Protecting against unexpected yield curve, inflation, and longevity shifts are some of the most critical issues institutional and private investors must solve when managing post-retirement income benefits. This paper empirically investigates the performance of alternative immunization strategies for funding targeted multiple liabilities that are fixed in timing but random in size (inflation-linked), i.e., that change stochastically according to consumer price or wage level indexes. The immunization procedure is based on a targeted minimax strategy considering the M-Absolute as the interest rate risk measure. We investigate to what extent the inflation-hedging properties of ILBs in asset liability management strategies targeted to immunize multiple liabilities of random size are superior to that of nominal bonds. We use two alternative datasets comprising daily closing prices for U.S. Treasuries and U.S. inflation-linked bonds from 2000 to 2018. The immunization performance is tested over 3-year and 5-year investment horizons, uses real and not simulated bond data and takes into consideration the impact of transaction costs in the performance of immunization strategies and in the selection of optimal investment strategies. The results show that the multiple liability immunization strategy using inflation-linked bonds outperforms the equivalent strategy using nominal bonds and is robust even in a nearly zero interest rate scenario. These results have important implications in the design and structuring of ALM liability-driven investment strategies, particularly for retirement income providers such as pension schemes or life insurance companies.

scholarly journals HOW ACCURATELY DOES 70% FINAL EMPLOYMENT EARNINGS REPLACEMENT MEASURE RETIREMENT INCOME (IN)ADEQUACY? INTRODUCING THE LIVING STANDARDS REPLACEMENT RATE (LSRR)

2016 ◽  
Vol 46 (3) ◽  
pp. 627-676 ◽  
Author(s):  
Bonnie-Jeanne MacDonald ◽  
Lars Osberg ◽  
Kevin D. Moore
Keyword(s):  
Living Standards ◽  
Living Standard ◽  
Retirement Income ◽  
Home Equity ◽  
Replacement Rate ◽  
Policy Makers ◽  
Income Adequacy ◽  
Rate Measure ◽  
The Right ◽  
Dynamic Population

AbstractWill 70% of a worker's final annual employment earnings sustain living standards after retirement? Despite increasing skepticism, the most dominant measure of retirement income adequacy by financial planners, pensions plan advisors, academics and public policy makers is the “final employment earnings replacement rate”, where 70% is considered the right target to ensure living standards remain at approximately the same level after retirement. Using Statistics Canada's LifePaths dynamic population micro-simulation model, this paper asks whether those individuals from the 1951–1958 Canadian birth cohort who attain roughly a 70% final employment earnings replacement rate (as conventionally measured) at retirement do, in fact, achieve approximate continuity in their living standards. We find that the conventional final earnings replacement rate measure has little predictive value for living standards continuity between working-life and retirement. The primary reason is that employment earnings in a single year is not a reliable representation of a worker's standard of living — it relies on an inadequate pre-retirement measurement period, does not incorporate important components of consumption sources (such as home equity), and ignores household size (particularly children). As a result, we find that the correlation between the conventional earnings replacement rate and actual living standards continuity is relatively low (0.11). The paper therefore suggests an alternative metric for assessing how well a worker's living standard is maintained after retirement — i.e., the Living Standards Replacement Rate, or the LSRR. The LSRR provides a more accurate, understandable and consistent measure of retirement income adequacy.

scholarly journals The Impact of Management Fees on the Pricing of Variable Annuity Guarantees

Risks ◽  
2018 ◽  
Vol 6 (3) ◽  
pp. 103
Author(s):  
Jin Sun ◽  
Pavel Shevchenko ◽  
Man Fung
Keyword(s):  
Numerical Experiments ◽  
Downside Risk ◽  
Equity Market ◽  
Retirement Income ◽  
Variable Annuities ◽  
Management Fees ◽  
Market Friction ◽  
Market Management ◽  
Retirement Fund ◽  
The Impact

Variable annuities, as a class of retirement income products, allow equity market exposure for a policyholder’s retirement fund with optional guarantees to limit the downside risk of the market. Management fees andguarantee insurance fees are charged respectively for the market exposure and for the protection from the downside risk. We investigate the pricing of variable annuity guarantees under optimal withdrawal strategies when management fees are present. We consider from both policyholder’s and insurer’s perspectives optimal withdrawal strategies and calculate the respective fair insurance fees. We reveal a discrepancy where the fees from the insurer’s perspective can be significantly higher due to the management fees serving as a form of market friction. Our results provide a possible explanation of lower guarantee insurance fees observed in the market than those predicted from the insurer’s perspective. Numerical experiments are conducted to illustrate the results.

scholarly journals Welfare Systems and Adequacy of Pension Benefits in Europe

2011 ◽  
Vol 11 (1) ◽  
pp. 41-53 ◽  
Author(s):  
Orla Gough ◽  
Roberta Adami
Keyword(s):  
European Countries ◽  
Retirement Income ◽  
Private Pensions ◽  
Public And Private ◽  
Pension Systems ◽  
Welfare Systems ◽  
Private And Public ◽  
Post War ◽  
Pension Benefits ◽  
The Impact

During the post-war years many European countries have implemented far-reaching but diverse pension systems with the objective of providing those in retirement with adequate incomes. In this study, we explore the link between pension systems and the adequacy of retirement income. We analyse the mix of public and private pensions and consider the impact of different policies on poverty rates amongst pensioners. We suggest that only a few European countries have been successful in providing combinations of private and public pensions that improve the adequacy of retirement income.

Perceptions of Retirement Adequacy: Evidence From South Africa

2018 ◽  
Vol 29 (2) ◽  
pp. 343-356 ◽  
Author(s):  
Michelle Reyers
Keyword(s):  
Financial Risk ◽  
Time Perspective ◽  
Future Time Perspective ◽  
Risk Tolerance ◽  
Financial Behavior ◽  
Retirement Income ◽  
Retirement Savings ◽  
Savings Behavior ◽  
South Africans ◽  
Income Adequacy

Concerns regarding the adequacy of retirement savings have contributed to the move to encourage better savings behavior. One area of research focuses on understanding the profile of individuals who believe they are preparing adequately for retirement. The current study uses data from a national survey of South Africans to determine how confident workers are about their future retirement income adequacy, and whether behavioral characteristics play a role in their perception of retirement readiness. This study highlights the role that behavioral factors play in perceptions of retirement income adequacy in an African developing market context. In particular, financial risk tolerance, future time perspective, good financial behavior, and self-assessed financial knowledge are all found to be positively related to respondents’ retirement confidence.

scholarly journals Helping South Africans achieve a better income in retirement: a critical evaluation of the impact of treasury proposals

2015 ◽  
Vol 8 (1) ◽  
pp. 185-202
Author(s):  
Jesse A. De Beer
Keyword(s):  
South African ◽  
Financial Regulation ◽  
Institutional Environment ◽  
Critical Evaluation ◽  
Partial Solution ◽  
Retirement Income ◽  
Policy Proposal ◽  
South Africans ◽  
Wide Range ◽  
The Impact

Retirement income security is an issue relevant to the majority of South Africans, many of whom are financially inexperienced and illiterate. South Africa has a sophisticated retirement industry offering a very wide range of choice of annuity products, but these are often not designed to optimise choices by rather unsophisticated investors. This article provides an overview of issues in the South African income withdrawal market, as well as policy remedies proposed by National Treasury to deal with these issues. The aim of this paper is to provide a critical analysis of these policy proposals, using a behaviourally informed framework to financial regulation (Barr, Mullainathan & Shafir, 2008). It recognises that policy remedies need to take into account the realities of how people make retirement income decisions, and how the institutional environment impacts on this. The results of the research suggest that the main policy proposal – simplifying the retirement income withdrawal landscape through the use of default options – is only a partial solution to the problem of unsophisticated consumers who must make several challenging decisions. The research contributes to the literature by providing a more complete, integrated view of the factors that shape retirement income withdrawal decisions and offers practitioners several insights into appropriate reform of the retirement income market.

scholarly journals The Impact of Diabetes on the Labour Force Participation, Savings and Retirement Income of Workers Aged 45-64 Years in Australia

PLoS ONE ◽  
2015 ◽  
Vol 10 (2) ◽  
pp. e0116860 ◽  
Author(s):  
Deborah Schofield ◽  
Michelle Cunich ◽  
Simon Kelly ◽  
Megan E. Passey ◽  
Rupendra Shrestha ◽  
...  
Keyword(s):  
Labour Force ◽  
Labour Force Participation ◽  
Retirement Income ◽  
The Impact
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