June 2021
17Jun

Do adverse health shock s induce myopic financial planning?

By Jialu L. Streeter Health and financial planning have both been found to be crucial to long-term financial stability. However, the impact of a health shock on financial plan-ning horizon was not directly tested. This article traces the trajectories of the financial planning horizon before and after the occurrence of work-limitinghealth shocks, using longitudinal panel data from the Health and RetirementStudy. Results show that, during the 10 years following a health shock, individ-uals are 20 to 39% more likely to...

June 17, 2021
Articles, Savings, , ,
Read more...

May 2021
20May

Scaling Up Sustainable Investment through Blockchain-Based Project Bonds

By Yushi Chen, Ulrich Volz This paper explores options for mobilizing domestic savings through fintech solutions to scale up sustainable investment. Most developing and emerging economies face an urgent need to scale up sustainable finance for low-carbon and climate-resilient infrastructure investment, yet underdeveloped capital markets tend to inhibit domestic resource mobilization for infrastructure investment. At the same time, domestic savers in many developing and emerging economies face a scarcity of “safe” assets in the local currency, resulting in the exporting...

May 20, 2021
Articles, Investing, Savings, , , ,
Read more...
06May

Time Horizon, Saving Motive and Stock Market Participation

By Yosef Bonaparte This paper shows that household’s saving motives influence key portfolio choice decision: stock market participation. We utilize a unique data set from the Survey of Consumer Finance (2019 and panel 2007-209), which report about 24 reasons for saving and group these intro 6 saving motive categories: durable, retirement, bequest, emergency, smooth and luxury. Our channel to identify how saving motives influence portfolio choice encompasses the time horizon, from the household’s view, about the planning time horizon to...

May 6, 2021
Articles, Investment, Savings, ,
Read more...

April 2021
29Apr

Rethinking Retirement Savings

By Jason Fernandes, Janelle Orsi In this Commentary, we demonstrate that the rules governing retirement savings have been funneling tens of trillions of dollars into a narrow class of return-maximizing investments, including industries that have been driving inequality and widespread ecological destruction. The Employee Retirement Income Security Act of 1974 (ERISA), along with its state law analogs, directs trustees to seek the highest risk-adjusted return on plan assets, regardless of the consequences to workers, their communities, and the planet. American...

April 29, 2021
Articles, Investing, Savings, , ,
Read more...
29Apr

What Explains Low Old-Age Income? Evidence from the Health and Retirement Study

By Olivia S. Mitchell, Robert L. Clark, Annamaria Lusardi We examine respondents in the Health and Retirement Study (HRS) to observe how their financial situations unfolded as they aged. We focus on low income older adults and follow them over time to identify the factors associated with having low income at baseline and thereafter. We find that (a) real income remained relatively stable as individuals approach and enter retirement, and progress through their retirement years, and (b) labor force participation...

April 29, 2021
Adequacy, Articles, Pension design, Savings, , , ,
Read more...
15Apr

Do Required Minimum Distribution 401(K) Rules Matter, and for Whom? Insights from a Lifecycle Model

By Vanya Horneff, Raimond Maurer, Olivia S. Mitchell Tax-qualified vehicles helped U.S. private-sector workers accumulate $25Tr in retirement assets. An often-overlooked important institutional feature shaping decumulations from these retirement plans is the “Required Minimum Distribution” (RMD) regulation, requiring retirees to withdraw a minimum fraction from their retirement accounts or pay excise taxes on withdrawal shortfalls. Our calibrated lifecycle model measures the impact of RMD rules on financial behavior of heterogeneous households during their worklives and retirement. We show that proposed...

April 15, 2021
Articles, Pension design, Savings, ,
Read more...

March 2021
19Mar

The Welfare and Labor Market Effects of Mandatory Pension Savings: Evidence from the Israeli Case

By Adi Brender Many studies show that workers make poor decisions about pension savings. Policy responses to these failures include social security retirement arrangements, tax benefits for pension savings and, in some countries, also mandatory private savings towards retirement. This study examines the response of Israeli employees to the introduction of mandatory pension contributions, and the medium-term labor market effects of the arrangement, using a randomly selected panel of 300,000 employees. The first year of the arrangement, when enforcement was...

March 19, 2021
Adequacy, Articles, Labor Market, Savings, , ,
Read more...
12Mar

Towards Improved Retirement Savings Outcomes for Women

By OECD Labour market inequalities are well-known to be the main drivers of the gender pension gap. This publication focuses on helping governments find solutions for retirement savings arrangements that do not further exacerbate these inequalities. This study first analyses why the gender pension gap exists and sheds light on some of the behavioural and cultural factors that contribute to these inequalities. Country case studies assess how demographics, labour markets and other factors may affect gaps in pension coverage, assets...

March 12, 2021
Books, Labor Market, Pension design, Reports, Savings, , ,
Read more...
05Mar

What Are the Main Socio-Economic and Behavioral Characteristics That Determine Voluntary Pension Contributions for Self-Employed Workers in Chile?

By Valentina Ciriotto, Camila Cuevas, Francisco Aravena This study contributes to the literature by examining how socio-economic and behavioral characteristics such as neighborhood income inequality and peer effects determine voluntary pension contributions for self-employed workers in Chile. We use a survey representative of the Chilean household sector and we run five different probit regressions to elucidate voluntary contributions to the pension system for self-employed workers. Additionally, we run probit models with a heteroscedastic structure (hetprobit models). The results show that...

March 5, 2021
Articles, Savings, , ,
Read more...

February 2021
19Feb

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 19, 2021
Articles, Savings, , ,
Read more...