November 2019

22Nov

How Would 401(K) ‘Rothification’ Alter Saving, Retirement Security, and Inequality?

By Vanya Horneff, Raimond Maurer, Olivia S. Mitchell The US has long incentivized retirement saving in 401(k) and similar retirement accounts by permitting workers to defer taxes on contributions, levying them instead when retirees withdraw funds in retirement. This paper develops a dynamic life cycle model to show how and whether ‘Rothification’ – that is, taxing 401(k) contributions rather than payouts – would alter household saving, investment, and Social Security claiming patterns. We show that these changes differ importantly...

November 22, 2019
Articles, Pension design, Savings, ,
Read more...
15Nov

How Best to Annuitize Defined Contribution Assets?

Alicia H. Munnell, Gal Wettstein, Wenliang Hou Unlike defined benefit pensions that provide participants with steady benefits for as long as they live, 401(k) plans and Individual Retirement Accounts (IRAs) provide little guidance on how to turn accumulated assets into income. As a result, retirees have to decide how much to withdraw each year and face the risk of either spending too quickly and outliving their resources or spending too conservatively and consuming too little. Surveys of individuals’ plans...

November 15, 2019
Articles, Investing, Savings,
Read more...
08Nov

A Two-Step Mixed Pension System: How to Reinvent Social Security with the Help of Notional Accounts and Term Annuities

By Inmaculada Domínguez-Fabián,Pierre Devolder, Francisco del Olmo García, Jose A Herce The change in economic and sociodemographic reality, characterized by a continuous increase in longevity, the consequences of the economic crisis, and the lack of adequate adjustments of social security retirement pension systems everywhere, entails risks for workers and the social security systems themselves. Many reforms of public pension systems have been carried out in recent years, based on modifying system parameters and structural changes. Some reforms aim at...

November 8, 2019
Articles, Investing, Pension design, Savings, ,
Read more...
04Nov

Behind the Success of Dominated Personal Pension Plans: Sales Force and Financial Literacy Factors

By Giuseppe Marotta (Department of Economics Marco Biagi and CEFIN) The revealed preference for dominated insurance-based personal pension plans in Italy is a decade-long puzzle. I surmise that a motivation from the supply side is a sales force factor deriving from the geographical distribution of financial providers, including the countrywide network of the state controlled Post Office. I provide supporting evidence using three biennial waves of the Bank of Italy’s survey on household finances from 2010 to 2014. The time...

November 4, 2019
Articles, Savings,
Read more...
04Nov

Evidence on Usage Behavior and Future Adoption Intention of Fintechs and Digital Finance Solutions

By Johannes M. Gerlach (Chair of Financial Services, Faculty of Business Administration and Economics, Heinrich-Heine-University) & Julia K. T. Lutz (Chair of Financial Services, Faculty of Business Administration and Economics, Heinrich-Heine University) Financial Technology Companies are gaining popularity and becoming more relevant within financial services industries worldwide. This growth can be encouraged by the EY FinTech Adoption Index, which indicates a global average FinTech Adoption of 33.0% in 2017. With regard to Financial Technology Companies and Digital Finance Solutions, this...

November 4, 2019
Articles, Investing, Savings, ,
Read more...

October 2019

25Oct

Don’t Save for Retirement: A Millennial’s Guide to Financial Freedom

By Daniel Ameduri Baby boomers are always giving millennials advice on the importance of saving for retirement. But Daniel Ameduri says that the results are in for the retirement experiment of the last 75 years and they’re really bad. When he was twenty-seven years old, Daniel was on the brink of bankruptcy. A decade later, he’s a multi-millionaire, having taught himself about economics, investing, and other money matters that he never learned at school or at home. The expert...

October 25, 2019
Books, Pension design, Savings, , ,
Read more...
25Oct

Measuring Household Wealth in the Panel Study of Income Dynamics: The Role of Retirement Assets

By Daniel Cooper, Karen E. Dynan, Hannah Rhodenhiser While the Panel Study of Income Dynamics (PSID) has much to offer researchers studying household behavior, one limitation is that its summary measure of wealth is not as broad as those of other commonly used surveys, such as the Survey of Consumer Finances (SCF), because it does not include the value of defined-contribution (DC) pensions. This paper describes the pension data available in the PSID and shows how they can be...

October 25, 2019
Articles, Investment, Savings, ,
Read more...
18Oct

Effects of Taxes and Safety Net Pensions on Life-Cycle Labor Supply, Savings and Human Capital: The Case of Australia

By Michael P. Keane, Fedor Iskhakov In this paper we structurally estimate a life-cycle model of consumption/savings, labor supply and retirement, using data from the Australian HILDA panel. We use the model to evaluate effects of the Australian aged pension system and tax policy on labor supply, consumption and retirement decisions. Our model accounts for human capital accumulation via learning by doing, as well as wealth accumulation and decumulation over the life cycle, uninsurable wage risk, credit constraints, a...

October 18, 2019
Articles, Labor Market, Pension design, Savings, , ,
Read more...
18Oct

Motivated Saving: The Impact of Projections on Retirement Saving Intentions

By George Smyrnis, Hazel Bateman, Loretti Dobrescu, Ben Rhodri Newell, Susan Thorp The implications of current balance information for retirement provision are considerably difficult to grasp or anticipate. We study how balance and/or income projections motivate the voluntary savings intentions of pension plan participants over a sequence of ten choices. To this effect, we collect savings intentions from 1,615 respondents aged 25-57 years via an online experimental survey that compares four different formats for retirement account information. The formats...

October 18, 2019
Articles, Pension design, Savings, ,
Read more...

September 2019

27Sep

Does Automatic Enrollment Increase Contributions to Supplement Retirement Programs by K-12 and University Employees?

By Robert L. Clark, Denis Pelletier This study examines the impact of the adoption of automatic enrollment provisions by schools and universities in the state of South Dakota for its supplemental retirement saving plan (SRP). In South Dakota, educational personnel are also covered by a defined benefit pension plan and by Social Security. Thus, career public employees in South Dakota can expect a life time annuity from these two programs of around 75 percent of their final salary. Prior...

September 27, 2019
Articles, Pension design, Savings, ,
Read more...