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Financing Old Age Dependency

Author

Listed:
  • Shinichi Nishiyama

    (Congressional Budget Office, Washington, DC 20515)

  • Kent Smetters

    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104
    National Bureau of Economic Research, Cambridge, Massachusetts 01238)

Abstract

Baby boomers are now retiring in large numbers, and most do not have enough assets of their own to finance retirement. Social insurance programs help baby boomers afford retirement, but these programs are substantially underfunded. Reforming these institutions earlier will produce fewer distortions than continued delays. Several options also exist for helping households prepare for their own retirement: improving financial literacy, more opt-out defaults, better guidance about the value of delaying retirement, better guidance about delaying the claiming of social security benefits, improved estimation of out-of-pocket medical costs, and understanding the incentives facing their financial advisors. Some of these options are likely to be more effective than others.

Suggested Citation

  • Shinichi Nishiyama & Kent Smetters, 2014. "Financing Old Age Dependency," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 53-76, August.
    • Handle: RePEc:anr:reveco:v:6:y:2014:p:53-76
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    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev-economics-080213-041304
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    More about this item

    Keywords

    baby boomers; aging; retirement; social security; household saving; opt-out automation; financial advice;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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