February 2021
12Feb

Millennials’ Adoption of Personal Financial Management (PFM) Technology and Financial Behavior

By Brian Walsh, HanNa Lim This paper uses the Technology Acceptance Model to analyze the factors associated with personal financial management technology (PFM) adoption among millennials and extends the analysis to understand how PFM adoption is associated with financial behavior. Data from the 2018 National Financial Capability Study was used for this analysis. Evidence suggests that millennials engaging in digital side hustles, such as Uber or Lyft, are significantly more likely to adopt PFM technology. Individuals experiencing higher financial pressure...

February 12, 2021
Articles, Innovation, Savings, , ,
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12Feb

Income and Saving Responses to Tax Incentives for Private Retirement Savings

By Marc K. Chan, Todd Morris, Cain Polidano, Ha Vu Many governments offer tax concessions for retirement contributions to boost retirement savings and alleviate the fiscal pressures of population aging. In this paper, we show that income responses are crucial for understanding these impacts. Using tax-register data, we study large changes in caps on tax-favored contributions to individual retirement accounts in Australia. We find that higher caps increase retirement contributions considerably, with around two-thirds of this response financed by increases...

February 12, 2021
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January 2021

14Jan

Maximizing Utility of Withdrawals in Retirement and the Efficiency of Required Minimum Distributions

By Chester Chambers We focus on a simplified problem for a risk-averse retiree seeking to maximize utility associated with annual spending and a remaining value at the end of the problem horizon when the funds are extracted from a portfolio that includes a risk-free and a risky asset. To organize discussions about this setting we utilize a novel metric which we label “Efficiency”. This measurement compares the utility derived from annual withdrawals and the final value with a benchmark...

January 14, 2021
Articles, Pension Management, Savings, , ,
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14Jan

How Poor Bangladeshi Households Behave Regarding Access to Commitment Savings Products

By Carolina Laureti, Mélanie Volral Access to commitment savings products is known to increase poor households’ savings. In this paper we analyze the process through which households change their savings behavior, by exploiting a unique dataset released by SafeSave, a Bangladeshi microfinance institution that launched the Long Term Savings commitment product in 2009. First, we find that households increase their savings a few months before they open the commitment product. Then, distinguishing early takers (who take up the commitment...

January 14, 2021
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08Jan

The Demand for Simple and Flexible Retirement Products

By Pim Koopmans, Marike Knoef, Max van Lent Many people save too little for retirement. This paper studies – using a stated choice experiment – whether simplicity and flexibility can increase the demand for retirement products. We compare the willingness-to-pay (WTP) for self-employed workers and employees, and find that the self-employed are willing to give up 8% of post-retirement benefit in order to avoid having to provide information about their financial situation. In addition, self-employed workers are willing to...

January 8, 2021
Articles, Pension design, Savings, ,
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January 2021
01Jan

Collecting and transferring pension contributions

By Rafael Rofman & Gustavo Demarco Collecting social security contributions is an important operational issue in all types of pension systems. Many regimes are plagued by poor compliance and weak, inefficient administration. Some countries have tried to introduce an automatic incentive to contribute by moving systems closer to"actuarial fairness,"where pension benefits are more strictly related to individual contributions. Examples include the systems of individual accounts introduced in a range of countries in Latin America and Eastern Europe. But in these...

January 1, 2021
Articles, Operation, Savings, ,
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01Jan

Retirement Savings in Mena

By Gustavo Demarco Public pensions are important in MENA, but their role as institutional investors remains uncertain in view of the sustainability problems that pension schemes are facing due to the over generosity of their promises. In addition to the gradual loss of reserves, portfolios are not very diversified and this, in turn, reveals a low level of professional management probably com bined with an absence of autonomy in the asset allocation process. An exception to this rule is the...

January 1, 2021
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November 2020

12Nov

Factors Associated with the Ownership of Individual Retirement Accounts (IRAs): Applying the Theory of Planned Behavior

By Frank Magwegwe Despite the importance of retirement savings, many individuals retire with lack of adequate retirement savings. Applying the Theory of Planned Behavior, we developed a model in which psychological factors influence the calculation of retirement savings needs, which in turn influences the ownership of independent retirement accounts. The results showed that favorable attitudes, strong social norms, and perceived behavioral control are associated with calculating retirement savings needs. Also, calculating retirement savings needs as well as perceived behavioral...

November 12, 2020
Articles, Pension design, Savings, , ,
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October 2020

23Oct

Changes to Household Retirement Savings Since 1989

By Andrew G. Biggs This report uses two new data sources to provide insights on the evolution of retirement savings over the past three decades and how future retirees may fare. First, the Federal Reserve’s Survey of Consumer Finances and Distributional Financial Accounts (DFA) provide estimates of both household savings in retirement accounts and any benefits households accrued under a traditionally defined benefit pension. The DFA data show that, from 1989 through 2016, household retirement savings increased for every...

October 23, 2020
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23Oct

Reconsidering Risk Aversion

By Daniel J. Benjamin, Mark Alan Fontana, Miles S. Kimball Risk aversion is typically inferred from real or hypothetical choices over risky lotteries, but such “untutored” choices may reflect mistakes rather than preferences. We develop a procedure to disentangle preferences from mistakes: after eliciting untutored choices, we confront participants with their choices that are inconsistent with expected-utility axioms (broken down enough to be self-evident) and allow them to reconsider their choices. We demonstrate this procedure via a survey about...

October 23, 2020
Articles, Investment, Savings, ,
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