Tuesday, June 13, 2017

New papers from the NBER

Social Security and Saving: An Update by Sita Slavov, Devon Gorry, Aspen Gorry, Frank N. Caliendo - #23506 (AG PE)


Typical neoclassical life-cycle models predict that Social Security has a large and negative effect on private savings. We review this theoretical literature by constructing a model where individuals face uninsurable longevity risk and differ by wage earnings, while Social Security provides benefits as a life annuity with higher replacement rates for the poor. We use the model to generate numerical examples that confirm the standard result. Using several benefit and tax changes from the 1970s and 1980s as natural experiments, we investigate the empirical relationship between Social Security and private savings and find little to support the strong predictions from the theoretical model. We explore possible reasons for the divergence between theoretical predictions and empirical findings.


Planning for Retirement? The Importance of Time Preferences

by Robert L. Clark, Robert G. Hammond, Christelle Khalaf, Melinda Sandler Morrill - #23501 (AG)


Ensuring retirement income security is a priority for individuals, employers, and policymakers. Using merged administrative and survey data for public sector workers in North Carolina, we explore how workers' characteristics and preferences are associated with planning and saving for retirement. We then assess the "quality" of a retirement plan and whether retirement behavior is consistent with

these plans. The findings indicate that the way that individuals

discount future consumption is associated with the extent of their retirement planning and preparedness. We find that individuals who engage in retirement planning are better prepared to meet their retirement goals upon leaving their career jobs.


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