IDEAS home Printed from https://ideas.repec.org/p/fip/fedbwp/88219.html
   My bibliography  Save this paper

Wealth Distribution and Retirement Preparation among Early Savers

Author

Abstract

This paper develops a new combined-wealth measure by augmenting data on net worth from the Survey of Consumer Finances with estimates of defined benefit (DB) pension and expected Social Security wealth. We use this concept to explore retirement preparation among two groups of households in pre-retirement years (aged 40 through 49 and 50 through 59), and to explore the concentration of wealth. We find evidence of moderate, but rising, shortfalls in retirement preparation. We also show that including DB pension and Social Security wealth results in markedly lower measures of wealth concentration, and it slightly moderates trends toward a higher concentration over time.

Suggested Citation

  • Alice Henriques Volz & Lindsay Jacobs & Elizabeth Llanes & Kevin B. Moore & Jeffrey P. Thompson, 2020. "Wealth Distribution and Retirement Preparation among Early Savers," Working Papers 20-4, Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbwp:88219
    DOI: 10.29412/res.wp.2020.04
    as

    Download full text from publisher

    File URL: https://www.bostonfed.org/publications/research-department-working-paper/2020/wealth-distribution-and-retirement-preparation-among-early-savers.aspx
    File Function: Summary
    Download Restriction: no
    File URL: https://www.bostonfed.org/-/media/Documents/Workingpapers/PDF/2020/wp2004.pdf
    File Function: Full text
    Download Restriction: no
    File URL: https://libkey.io/10.29412/res.wp.2020.04?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Arthur B. Kennickell, 2006. "Currents and undercurrents: changes in the distribution of wealth, 1989-2004," Finance and Economics Discussion Series 2006-13, Board of Governors of the Federal Reserve System (U.S.).
    2. Wolff, Edward N., 2007. "The retirement wealth of the baby boom generation," Journal of Monetary Economics, Elsevier, vol. 54(1), pages 1-40, January.
    3. Pfeffer, Fabian T. & Schoeni, Robert F. & Kennickell, Arthur & Andreski, Patricia, 2016. "Measuring wealth and wealth inequality: Comparing two U.S. surveys," Journal of Economic and Social Measurement, IOS Press, issue 2, pages 103-120.
    4. Jesse Bricker & Alice Henriques & Jacob Krimmel & John Sabelhaus, 2016. "Measuring Income and Wealth at the Top Using Administrative and Survey Data," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 47(1 (Spring), pages 261-331.
    5. Bricker, Jesse & Engelhardt, Gary V., 2014. "A test for selection in matched administrative earnings data," Journal of Economic and Social Measurement, IOS Press, issue 4, pages 247-255.
    6. Vincenzo Quadrini, 1999. "The Importance Of Entrepreneurship For Wealth Concentration And Mobility," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 45(1), pages 1-19, March.
    7. Alicia H. Munnell & Matthew S. Rutledge & Anthony Webb, 2014. "Are Retirees Falling Short? Reconciling the Conflicting Evidence," Working Papers, Center for Retirement Research at Boston College wp2014-16, Center for Retirement Research.
    8. Emmanuel Saez & Gabriel Zucman, 2016. "Editor's Choice Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(2), pages 519-578.
    9. Alicia H. Munnell & Wenliang Hou & Geoffrey T. Sanzenbacher, 2018. "National Retirement Risk Index Shows Modest Improvement in 2016," Issues in Brief ib2018-1, Center for Retirement Research.
    10. Gustman, Alan L. & Steinmeier, Thomas L., 1999. "Effects of pensions on savings: analysis with data from the health and retirement study," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 50(1), pages 271-324, June.
    11. Edward N. Wolff, 2002. "Inheritances and Wealth Inequality, 1989–1998," American Economic Review, American Economic Association, vol. 92(2), pages 260-264, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Alice Henriques Volz & Lindsay Jacobs & Elizabeth Llanes & Kevin B. Moore & Jeffrey P. Thompson, 2021. "Wealth Concentration in the United States Using an Expanded Measure of Net Worth," Working Papers 21-6, Federal Reserve Bank of Boston.
    2. Jonathan D. Fisher & David S. Johnson & Timothy M. Smeeding & Jeffrey P. Thompson, 2022. "Inequality in 3‐D: Income, Consumption, and Wealth," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(1), pages 16-42, March.
    3. , 2021. "Racial Wealth Disparities: Reconsidering the Roles of Human Capital and Inheritance," Working Papers 22-3, Federal Reserve Bank of Boston.
    4. Alice Henriques Volz & Jeffrey P. Thompson, 2021. "A New Look at Racial Disparities Using a More Comprehensive Wealth Measure," Current Policy Perspectives 92970, Federal Reserve Bank of Boston.
    5. Lisa J. Dettling & Sarena Goodman & Sarah Reber, 2022. "Saving and Wealth Accumulation among Student Loan Borrowers: Implications for Retirement Preparedness," Finance and Economics Discussion Series 2022-019, Board of Governors of the Federal Reserve System (U.S.).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alice Henriques Volz & Lindsay Jacobs & Elizabeth Llanes & Kevin B. Moore & Jeffrey P. Thompson, 2021. "Wealth Concentration in the United States Using an Expanded Measure of Net Worth," Working Papers 21-6, Federal Reserve Bank of Boston.
    2. Elinder, Mikael & Erixson, Oscar & Waldenström, Daniel, 2018. "Inheritance and wealth inequality: Evidence from population registers," Journal of Public Economics, Elsevier, vol. 165(C), pages 17-30.
    3. Brant Abbott & Giovanni Gallipoli, 2022. "Permanent‐income inequality," Quantitative Economics, Econometric Society, vol. 13(3), pages 1023-1060, July.
    4. Andreas Fagereng & Luigi Guiso & Davide Malacrino & Luigi Pistaferri, 2020. "Heterogeneity and Persistence in Returns to Wealth," Econometrica, Econometric Society, vol. 88(1), pages 115-170, January.
    5. Schularick, Moritz & Albers, Thilo & Bartels, Charlotte, 2022. "Wealth and its Distribution in Germany, 1895-2018," CEPR Discussion Papers 17269, C.E.P.R. Discussion Papers.
    6. Per Krusell & Anthony Smith & Joachim Hubmer, 2015. "The historical evolution of the wealth distribution: A quantitative-theoretic investigation," 2015 Meeting Papers 1406, Society for Economic Dynamics.
    7. Moritz Kuhn & Moritz Schularick & Ulrike I. Steins, 2020. "Income and Wealth Inequality in America, 1949–2016," Journal of Political Economy, University of Chicago Press, vol. 128(9), pages 3469-3519.
    8. Jesse Bricker & Alice Henriques Volz & Kevin B. Moore, 2017. "Updates to the Sampling of Wealthy Families in the Survey of Consumer Finances," Finance and Economics Discussion Series 2017-114, Board of Governors of the Federal Reserve System (U.S.).
    9. Alina K. Bartscher & Moritz Kuhn & Moritz Schularick, 2020. "The College Wealth Divide: Education and Inequality in America, 1956-2016," Review, Federal Reserve Bank of St. Louis, vol. 102(1), pages 19-49.
    10. Matthew Smith & Owen Zidar & Eric Zwick, 2020. "Top Wealth in America: New Estimates and Implications for Taxing the Rich," Working Papers 264, Princeton University, Department of Economics, Center for Economic Policy Studies..
    11. Saez, Emmanuel & Stantcheva, Stefanie, 2018. "A simpler theory of optimal capital taxation," Journal of Public Economics, Elsevier, vol. 162(C), pages 120-142.
    12. Wildauer, Rafael & Kapeller, Jakob, 2022. "Tracing the invisible rich: A new approach to modelling Pareto tails in survey data," Labour Economics, Elsevier, vol. 75(C).
    13. Jesper Roine & Daniel Waldenström, 2009. "Wealth Concentration over the Path of Development: Sweden, 1873–2006," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(1), pages 151-187, March.
    14. Edward N. Wolff, 2021. "The declining wealth of the middle class, 1983–2016," Contemporary Economic Policy, Western Economic Association International, vol. 39(3), pages 461-478, July.
    15. Jacob Lundberg & Daniel Waldenström, 2018. "Wealth Inequality in Sweden: What can we Learn from Capitalized Income Tax Data?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(3), pages 517-541, September.
    16. Atanu Ghoshray & Issam Malki & Javier Ordóñez, 2022. "On the long-run dynamics of income and wealth inequality," Empirical Economics, Springer, vol. 62(2), pages 375-408, February.
    17. Bertrand Garbinti & Jonathan Goupille-Lebret & Thomas Piketty, 2021. "Accounting for Wealth-Inequality Dynamics: Methods, Estimates, and Simulations for France," Journal of the European Economic Association, European Economic Association, vol. 19(1), pages 620-663.
    18. Wojciech Kopczuk & Eric Zwick, 2020. "Business Incomes at the Top," Journal of Economic Perspectives, American Economic Association, vol. 34(4), pages 27-51, Fall.
    19. Joachim Hubmer & Per Krusell & Anthony A. Smith Jr., 2020. "Sources of US Wealth Inequality: Past, Present, and Future," NBER Chapters, in: NBER Macroeconomics Annual 2020, volume 35, pages 391-455, National Bureau of Economic Research, Inc.
    20. Anmol Bhandari & Serdar Birinci & Ellen R. McGrattan & Kurt See, 2020. "What Do Survey Data Tell Us about US Businesses?," American Economic Review: Insights, American Economic Association, vol. 2(4), pages 443-458, December.

    More about this item

    Keywords

    retirement adequacy; wealth inequality; Social Security;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedbwp:88219. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Spozio (email available below). General contact details of provider: https://edirc.repec.org/data/frbbous.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.