New papers from the Social Science Research Network

"Retirement Timing and Pension Incentives: Evidence from the Teachers Retirement System of Texas"

GABRIEL SALINAS, University of Texas at Austin
Email: gabriel.salinas@trs.texas.gov

I exploit unanticipated reforms to the Texas Teacher's pension plan to estimate the effect of pension incentives on retirement decisions. In 2000 and 2002 the Teacher Retirement System increased the benefit levels of all employees covered by the pension system. The reforms provide plausibly exogenous variation in the incentives to work - which differentially impacted workers due to non-linearities in the pension's benefit schedule. I leverage the reforms coupled with the non-linear benefit schedule in an instrumental variables framework to estimate the effect of pension related incentives on the decision to retire. I find substantial heterogeneity between men and women in their response to a one-year incentive to remain in the labor force. Additionally I find that a 10 percent increase in forward looking incentives decreases the probability of retirement by 1.84 percentage points from a baseline of 11 percent.

"Guardianship and the Representative Payee Program"
CRR WP 2017-8 August 2017

ANEK BELBASE, Boston College - Center for Retirement Research
Email: anbelbas@gmail.com
GEOFFREY SANZENBACHER, Boston College Economics Department
Email: geoffrey.sanzenbacher.1@bc.edu

Research suggests that 0.3 percent of all adults have been appointed a legal guardian. While the requirements for being placed into guardianship can vary from state to state, a lack of decision-making capacity is a precondition. As a result, one would expect Social Security beneficiaries who have a guardian to also have their guardian act as a representative payee. Yet little is known about the relationship between guardianship and the Representative Payee Program.
In response to a request from the Social Security Administration, this report uses the Survey of Income and Program Participation (SIPP) linked to the Social Security Master Beneficiary File and the Supplemental Security Record to investigate three questions:
1) how many beneficiaries with representative payees have guardians?;
2) how many beneficiaries have their guardian as their payee?; and
3) what are the characteristics of those with both a payee and a guardian.
Because the SIPP does not include individuals residing in nursing homes, the project also examines data from the Health and Retirement Study, which does include these individuals.
This paper found that:
- Guardianship is more common among those in the Representative Payee Program than in the population writ large, with between 5 percent to 11 percent of those with a representative payee also having a guardian, depending on the program and dataset considered.
- For those with both a representative payee and a guardian, the guardian serves as the payee the vast majority of the time.
- Individuals with a representative payee are more likely to have a guardian if they are older, white, and are not living with their representative payee. The policy implications of this paper are:
- While guardianship could lessen the need for representative payees since it provides a protective legal arrangement, few individuals with a representative payee have one.
- As more representative payees are needed with the aging of the Baby Boomers, pre-existing guardians seem unlikely to fill a large portion of the need.

"Family Transfers with Retirement-Aged Adults in the United States: Kin Availability, Wealth Differentials, Geographic Proximity, Gender, and Racial Disparities"

ASHTON VERDERY, Pennsylvania State University
Email: amv5430@psu.edu
JONATHAN DAW, Pennsylvania State University
Email: jddaw@psu.edu
COLIN CAMPBELL, East Carolina University
Email: colin@senscot.net
RACHEL MARGOLIS, University of Western Ontario
Email: soeppapers642@diw.de

This paper examines transfers of time and money between retirees and their children. It uses data from the Panel Study of Income Dynamics to test whether numbers of children, parent-child wealth differentials, geographic proximity, and gender contribute to racial and ethnic differences in transfers of time and money between retirement-aged adults and their children. Critical components of the analysis include measuring kin availability, the spatial and social embeddedness of family networks, supply as well as demand for transfers, and gender. Key limitations are that we exclude those who have no living family members with whom they could transfer, and we do not examine the role of non-familial transfers.
The paper found that:
-There are large racial disparities in family transfers; non-White older adults are less likely to give either time or money transfers to their children than White older adults. Non-White older adults are also less likely to receive time transfers from their children, but they are more likely to receive money transfers from them.
-Having more children is associated with marginal declines in the likelihood of transfer with each child, but an overall increase in the likelihood of transfer with any child.
-Parents who live closer to their children tend to provide more time to them and receive more time from them, while those in the same family provide more money.
-Parents who are relatively wealthier than their children are more likely to give them money and are less likely to receive time or money from them.
-Racial disparities in transfers appear to be growing across parental birth cohorts.
The policy implications of these findings are:
-Challenges regarding retiree financial security and the availability of informal care from family members are likely to grow because adults with fewer children receive less overall support than those with many children, and historical declines in birth rates mean that more older adults increasingly have fewer children.
-Older adults may be more likely to receive instrumental care, but not financial support, from their children in the future, because people are increasingly likely to live close to their children, and closer children are more likely to provide such care.
-There may be especially large unmet financial and instrumental needs for female and non-White population subgroups of retirees.

"Pension Plan Heterogeneity and Retirement Behavior"

NEHA BAIROLIYA, Harvard University
Email: nbairoli@hsph.harvard.edu

This paper examines the role of the shift in pension plans — from Defined Benefit to Defined Contribution — in explaining the recent increase in labor supply of older workers. A structural model of consumption, savings, Social Security, and pension plan heterogeneity is estimated using data from the Health and Retirement Study. Model simulations indicate that changes in pension plan composition can explain 10% to 30% percent of the recent increase in labor force participation of the age group 65-69, while changes in Social Security rules can explain less than a quarter of the increase in labor supply for this group.