April 2018

23Apr

Active vs. Passive Decisions and Crowdout in Retirement Savings Accounts: Evidence from Denmark

By Raj Chetty, John N. Friedman, Soren Leth-Petersen, Torben Nielsen, Tore Olsen Using 41 million observations on savings for the population of Denmark, we show that the impacts 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 upon 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...

April 23, 2018
Savings,
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23Apr

Retirement Drawdown Defaults: The Role of Implied Endorsement

By Jennifer Alonso-García (University of New South Wales (UNSW) - ARC Centre of Excellence in Population Ageing Research (CEPAR)), Hazel Bateman (University of New South Wales (UNSW) - School of Actuarial Studies, Centre for Pensions and Superannuation), Johan Bonekamp (Tilburg University - Department of Econometrics & Operations Research), Ralph Stevens (CPB Netherlands Bureau of Economic Policy Analysis; CEPAR) This paper explores whether implied endorsement can serve as an explanation for the stickiness of retirement drawdown defaults. Using an experimental survey...

April 23, 2018
Articles, Pension design, Savings, ,
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16Apr

Why Do Defaults Affect Behavior? Experimental Evidence from Afghanistan

By Joshua Blumenstock, Michael Callen, Tarek Ghani We report on an experiment examining why default options impact behavior. By randomly assigning employees to different varieties of a salary-linked savings account, we find that default enrollment increases participation by 40 percentage points—an effect equivalent to providing a 50% matching incentive. We then use a series of experimental interventions to differentiate between explanations for the default effect, which we conclude is driven largely by present-biased preferences and the cognitive cost of thinking...

April 16, 2018
Articles, Labor Market, Savings, ,
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March 2018

19Mar

When I’m Sixty-four: The Plot Against Pensions and the Plan to Save Them

By Teresa Ghilarducci A crisis is looming for baby boomers and anyone else who hopes to retire in the coming years. In When I'm Sixty-Four, Teresa Ghilarducci, the nation's leading authority on the economics of retirement, explains how to confront this crisis head-on, revealing the causes behind the increasingly precarious economics of old age in America and proposing a bold plan to guarantee retirement security for every working citizen. Retirement is one of the hallmarks of a prosperous, civilized market...

March 19, 2018
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19Mar

Social Security Claiming Decisions: Survey Evidence

By John B. Shoven, Sita Nataraj Slavov & David A. Wise While research shows that there are large gains in lifetime wealth from delaying claiming Social Security, most people claim at or before full retirement age. We fielded an original, nationally representative survey to gain insight into people’s rationales for their Social Security claiming decisions, their satisfaction with their past claiming decisions, and how they financed any gap between retirement and claiming. Common rationales for claiming Social Security before full...

March 19, 2018
Aging, Articles, Pension design, Savings, ,
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11Mar

Evaluating Retirement Strategies: A Utility-Based Approach

By Javier Estrada (IESE Business School) & Mark Kritzman (Windham Capital Management) Retirees need to make two critical financial decisions, namely, the withdrawal rate and the asset allocation of their portfolios. We propose a methodology that retirees, and particularly advisors, could use to make these decisions in an optimal way. We introduce a new variable, the coverage ratio, and a theoretical approach, based on utility. Our approach can be used to make optimal decisions during both the accumulation and the...

March 11, 2018
Articles, Investing, Savings, , , ,
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05Mar

Disclosure of costs, charges and investments in DC occupational pensions

UK Department for Work and Pensions This paper forms the Government’s response to a consultation on the draft Occupational Pension Schemes (Administration and Disclosure) (Amendment) Regulations 2018, which ran from the 26 October 2017 to 7 December 2017. The draft Regulations were designed to: introduce requirements for certain occupational schemes offering money purchase benefits to publish charge and transaction cost information, disclose this to members and others, and tell members where to find it; and introduce requirements for the same...

March 5, 2018
Articles, Pension design, Regulation, Savings, , ,
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05Mar

How Persistent Low Expected Returns Alter Optimal Life Cycle Saving, Investment, and Retirement Behavior

By Vanya Horneff, Raimond Maurer & Olivia S. Mitchell This paper explores how an environment of persistent low returns influences saving, investing, and retirement behaviors, as compared to what in the past had been thought of as more “normal” financial conditions. Our calibrated lifecycle dynamic model with realistic tax, minimum distribution, and Social Security benefit rules produces results that agree with observed saving, work, and claiming age behavior of U.S. households. In particular, our model generates a large peak at...

March 5, 2018
Aging, Articles, Investing, Savings, , ,
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February 2018

26Feb

Old-Age Provision and Homeownership – Fiscal Incentives and Other Public Policy Options

By Martina Eckardt (Editor),‎ Jörg Dötsch (Editor), & Stefan Okruch (Editor) In light of demographic change and the growing problems of traditional old-age security systems, this book discusses two essential instruments in connection with privately providing for old-age security: (1) savings in private pension schemes and (2) building up equity for home-ownership. Further, it assesses the relationship between the two instruments and offers a unique overview of the latest market developments. In order to represent the profound differences between the individual...

February 26, 2018
Books, Pension design, Savings,
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19Feb

Save More Tomorrow: Practical Behavioral Finance Solutions to Improve 401(k) Plans

By Shlomo Benartzi One of the world’s top experts in behavioral finance offers innovative strategies for improving 401(k) plans. Half of Americans do not have access to a retirement saving plan at their workplace. Of those who do about a third fail to join. And those who do join tend to save too little and often make unwise investment decisions. In short, the 401(k) world is in crisis, and workers need help. Save More Tomorrow provides that help by focusing on the...

February 19, 2018
Books, Pension design, Savings,
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