Strategic Asset Allocation for Individual Investors: The Impact of the Present Value of Social Security Benefits

CFA Digest ◽  
2002 ◽  
Vol 32 (2) ◽  
pp. 77-79
Author(s):  
Johann U. de Villiers
Keyword(s):  
Social Security ◽  
Asset Allocation ◽  
Individual Investors ◽  
Present Value ◽  
Strategic Asset Allocation ◽  
Social Security Benefits ◽  
The Impact

scholarly journals The contribution of changes to tax and social security to stalled life expectancy trends in Scotland: a modelling study

2020 ◽  
pp. jech-2020-214770
Author(s):  
Elizabeth Richardson ◽  
Martin Taulbut ◽  
Mark Robinson ◽  
Andrew Pulford ◽  
Gerry McCartney
Keyword(s):  
Life Expectancy ◽  
Social Security ◽  
Tax Credits ◽  
The Difference ◽  
Group Sex ◽  
The Uk ◽  
Social Security Benefits ◽  
The Impact ◽  
Welfare Reforms ◽  
Detrimental Impact

BackgroundLife expectancy (LE) improvements have stalled, and UK tax and welfare ‘reforms’ have been proposed as a cause. We estimated the effects of tax and welfare reforms from 2010/2011 to 2021/2022 on LE and inequalities in LE in Scotland.MethodsWe applied a published estimate of the cumulative income impact of the reforms to the households within Scottish Index of Multiple Deprivation (SIMD) quintiles. We estimated the impact on LE by applying a rate ratio for the impact of income on mortality rates (by age group, sex and SIMD quintile) and calculating the difference between inflation-only changes in benefits and the reforms.ResultsWe estimated that changes to household income resulting from the reforms would result in an additional 1041 (+3.7%) female deaths and 1013 (+3.8%) male deaths. These deaths represent an estimated reduction of female LE from 81.6 years to 81.2 years (−20 weeks), and male LE from 77.6 years to 77.2 years (−23 weeks). Cuts to benefits and tax credits were modelled to have the most detrimental impact on LE, and these were estimated to be most severe in the most deprived areas. The modelled impact on inequalities in LE was widening of the gap between the most and least deprived 20% of areas by a further 21 weeks for females and 23 weeks for males.InterpretationThis study provides further evidence that austerity, in the form of cuts to social security benefits, is likely to be an important cause of stalled LE across the UK.

Does it pay to delay social security?

2013 ◽  
Vol 13 (2) ◽  
pp. 121-144 ◽  
Author(s):  
JOHN B. SHOVEN ◽  
SITA NATARAJ SLAVOV
Keyword(s):  
Social Security ◽  
Interest Rates ◽  
Real Interest Rate ◽  
Mortality Rates ◽  
Present Value ◽  
Actuarial Fairness ◽  
Low Interest Rates ◽  
Social Security Benefits ◽  
To Receive ◽  
Mortality Improvements

AbstractSocial Security benefits may be commenced at any time between ages 62 and 70. As individuals who claim later can, on average, expect to receive benefits for a shorter period, an actuarial adjustment is made to the monthly benefit to reflect the age at which benefits are claimed. We investigate the actuarial fairness of that adjustment in light of recent improvements in mortality and historically low interest rates. We show that delaying is actuarially advantageous for a large number of people, even for individuals with mortality rates that are twice the average. At real interest rates closer to their historical average, singles with mortality that is substantially greater than average do not benefit from delay, although primary earners with high mortality can still improve the present value of the household's benefits through delay. We also investigate the extent to which the actuarial advantage of delay has grown since the early 1960s, when the choice of when to claim first became available, and we decompose this growth into three effects: (1) the effect of changes in Social Security's rules, (2) the effect of changes in the real interest rate, and (3) the effect of changes in life expectancy. Finally, we quantify the extent to which the gains from delay can be expected to increase in the future as a result of mortality improvements.

scholarly journals La notion de famille et son impact en droit social

2005 ◽  
Vol 22 (1) ◽  
pp. 5-54
Author(s):  
Mireille D. Castelli
Keyword(s):  
Social Security ◽  
Detailed Analysis ◽  
Interpersonal Relationships ◽  
Significant Role ◽  
Family Relationships ◽  
General Picture ◽  
The Family ◽  
Social Security Benefits ◽  
The Impact

This paper surveys references to the family in social legislation, with more specific regard to social security schemes providing coverage to a broad section of the population. Such references are seen as involving two types of questions. First, do statutory references to the family invoke a definite concept of the family cell ? And second, in what ways do family relationships influence one's position under social security legislation ? Thus the first part of the paper is an attempt to elucidate the concept of the family underlying social security legislation. This is done by considering the legislative treatment of three components of family relationships, which seem to play, either separately or in conjunction, a particularly significant role in statutes of this type : the network of interpersonal relationships that are included in the family, the concept of dependency, and the consequences attributed to cohabitation. The second part of the paper surveys the impact of family relationships on rights and duties under social security legislation. This part opens with a broad description of social legislation generally, followed by a threefold classification of social security schemes according to the type of economic hazard against which compensation is provided: loss of income, lack of income, increase in needs. The impact of family relationships in each group of statutes is then brought under detailed analysis, and a number of anomalies are pointed out. The general picture disclosed by the paper is one of severe confusion, both as to the concept of the family itself and as to the impact of family relationships on social security benefits. While inconsistencies of the latter kind may be explained and justified in a number of cases, it seems desirable that a single concept of the family be adhered to in all social security statutes. This, however, should not preclude variations where warranted by the policy of the Act, general standards of morality, or the particular purpose sought by statutory reference to family relationships.

Late Career Job Loss and Retirement Behavior of Couples

2016 ◽  
Vol 39 (1) ◽  
pp. 7-28 ◽  
Author(s):  
Ajin Lee
Keyword(s):  
Social Security ◽  
Job Loss ◽  
Health And Retirement Study ◽  
Budget Constraints ◽  
Unexpected Earnings ◽  
Retirement Behavior ◽  
Using Data ◽  
Social Security Benefits ◽  
The Impact ◽  
Retirement Study

This article argues that wealth uncertainty influences when couples choose to retire. Using data from the Health and Retirement Study, I show that wives delay retirement when their husbands retire following a job loss. This effect is stronger when husbands are the primary earners, and couples are relatively poorer. This provides evidence of intra-household insurance that mitigates the impact of an unexpected earnings shock. I find that wives tend to delay retirement only until they become eligible for social security. This suggests that social security benefits can relax households’ budget constraints and allow wives to join their husbands in retirement.

Banking crises and social policy: the case of Latin America and the Caribbean

2015 ◽  
Vol 31 (3) ◽  
pp. 209-233 ◽  
Author(s):  
Rana S. Gautam
Keyword(s):  
Social Policy ◽  
Social Security ◽  
Latin American ◽  
Banking Crises ◽  
Social Welfare Policy ◽  
Social Expenditure ◽  
Negative Effect ◽  
Distributional Conflicts ◽  
Social Security Benefits ◽  
The Impact

This paper examines the social policy consequences of systemic banking crises or financial crises in 13 Latin American and Caribbean countries between 1990 and 2010. It takes a rationalist approach to political economy to analyse the effect of these crises on aggregate social policy spending and on four distinct social welfare policy programmes – education, health, housing, and social security – benefits of which vary across social groups. The results indicate that banking crises have a statistically strong negative effect on aggregate social expenditure, but the impact is not uniform across the four programmes. While social security spending increases during the course of crises, health and education expenditures decrease in the same period. The results reinforce the view that distributional conflicts overshadow governments’ response and the burden of crises is unevenly shared in a heterogeneous society. These findings are robust to alternative specifications.

scholarly journals The uptake of social security benefits among psychiatric day hospital patients

1989 ◽  
Vol 13 (11) ◽  
pp. 626-627 ◽  
Author(s):  
Daniel S. Allen ◽  
Renate West
Keyword(s):  
Medical Journal ◽  
Social Security ◽  
Mentally Ill ◽  
Social Security System ◽  
Security System ◽  
Day Hospital ◽  
The Social ◽  
Hospital Patients ◽  
Social Security Benefits ◽  
The Impact

A leader in the British Medical Journal (BMJ) last year (Marks, 1988) suggested that the uptake of social security benefits among mentally ill people is low. However, this statement was based on the only data the writer could find – a study of 37 patients conducted in Islington based on the old social security system, prior to April 1988 (Linney & Boswell, 1987). Two weeks later, another BMJ leader (Marcovitch, 1988) bemoaned the fact that insufficient research had been conducted on the impact of changes in the social security system.

scholarly journals Quantitative model for impact of behavioral biases on asset allocation decisions: a case study of investors in UAE

2021 ◽  
Author(s):  
Ashutosh Pradhan
Keyword(s):  
Asset Allocation ◽  
Cognitive Biases ◽  
Quantitative Model ◽  
Individual Investors ◽  
Research Approach ◽  
Behavioral Biases ◽  
Cognitive Limitations ◽  
The World ◽  
The Impact ◽  
Allocation Decisions

AbstractIndividuals are expected to be rational and follow the approach prescribed under different traditional finance theories while constructing portfolios. In reality, studies from different parts of the world show that individuals do not act rationally due to cognitive limitations and influence of emotions and feelings. Additionally, in quite a few countries, religion plays an important role in decision-making. As a result, individuals make suboptimal decisions, like holding poorly diversified portfolios, excessive or minimal trading, and taking excessive or too little risk with their portfolios. The analysis of impact of behavioral biases and religiosity has not been done in the context of individual investors living in UAE, which this paper addresses. A survey questionnaire was administered to Arab nationals living in UAE. Data of 129 individuals were analyzed. The findings showed that these investors were influenced by emotional and cognitive biases, had good knowledge of religiosity, & placed them as important. This behavior is consistent with investor behavior observed in the rest of the world. Subsequent to these empirical findings, the paper has developed a quantitative model to predict the impact of behavioral biases and religiosity on asset allocation decisions. The research approach used for developing the quantitative model can be replicated by researchers from across the world tailored to their own regions.

scholarly journals The Welfare Cost of Perceived Policy Uncertainty: Evidence from Social Security

2018 ◽  
Vol 108 (2) ◽  
pp. 275-307 ◽  
Author(s):  
Erzo F. P. Luttmer ◽  
Andrew A. Samwick
Keyword(s):  
Social Security ◽  
Risk Premium ◽  
Welfare Cost ◽  
Policy Uncertainty ◽  
Individual Welfare ◽  
Expected Benefits ◽  
Original Survey ◽  
Social Security Benefits ◽  
The Impact ◽  
Consumption Fluctuations

Policy uncertainty reduces individual welfare when individuals have limited opportunities to mitigate or insure against the resulting consumption fluctuations. We field an original survey to measure the degree of perceived policy uncertainty in Social Security benefits and to estimate the impact of this uncertainty on individual welfare. Our central estimates show that on average individuals are willing to forgo 6 percent of the benefits they are supposed to get under current law to remove the policy uncertainty associated with their future Social Security benefits. This translates to a risk premium from policy uncertainty equal to 10 percent of expected benefits. (JEL D14, D81, H55)

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