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Changes in Subjective Well-being with Retirement: Assessing Savings Adequacy in Australia

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  • Garry F. Barrett
  • Milica Kecmanovic

Abstract

Does retirement represent a state of relative prosperity or a time of unanticipated economic hardship? To assess whether individuals are successful in smoothing their well-being across the transition to retirement we analyse measures of relative subjective wellbeing (SWB) in the Australian HILDA Survey. Specifically, this research examines individual's self-reported change in their standard of living, financial security, and overall happiness over the transition to retirement. It is found SWB either improves or remains constant for the large majority of individuals as they retire from the labour force. However, there are significant disparities in changes in well-being with retirement among retirees. In particular, the subset of individuals who are forced to retire early due to job loss or their own health, and who find their income in retirement to be much less than expected, report marked declines in their well-being in retirement.

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Bibliographic Info

Paper provided by McMaster University in its series Social and Economic Dimensions of an Aging Population Research Papers with number 296.

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Length: 33 pages
Date of creation: May 2012
Date of revision:
Handle: RePEc:mcm:sedapp:296

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Keywords: Retirement; subjective well-being; welfare; income expectations;

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References

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  1. Steven Haider & Melvin Stephens Jr., 2004. "Is There a Retirement-Consumption Puzzle? Evidence Using Subjective Retirement Expectations," NBER Working Papers 10257, National Bureau of Economic Research, Inc.
  2. Michael Baker & Jonathan Gruber & Kevin S. Milligan, 2009. "Retirement Income Security and Well-Being in Canada," NBER Working Papers 14667, National Bureau of Economic Research, Inc.
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  4. Michael Hurd & Susann Rohwedder, 2003. "The Retirement-Consumption Puzzle: Anticipated and Actual Declines in Spending at Retirement," Working Papers 03-12, RAND Corporation Publications Department.
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  7. Banks, James & Blundell, Richard & Tanner, Sarah, 1998. "Is There a Retirement-Savings Puzzle?," American Economic Review, American Economic Association, vol. 88(4), pages 769-88, September.
  8. Jerome Adda & Russell W. Cooper, 2003. "Dynamic Economics: Quantitative Methods and Applications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012014, December.
  9. Dolan, Paul & Peasgood, Tessa & White, Mathew, 2008. "Do we really know what makes us happy A review of the economic literature on the factors associated with subjective well-being," Journal of Economic Psychology, Elsevier, vol. 29(1), pages 94-122, February.
  10. repec:crr:crrwps:2004-24 is not listed on IDEAS
  11. Constantijn W.A. Panis, 2003. "Annuities and Retirement Satisfaction," Working Papers 03-17, RAND Corporation Publications Department.
  12. Deaton, Angus, 1992. "Understanding Consumption," OUP Catalogue, Oxford University Press, number 9780198288244.
  13. Mark Aguiar & Erik Hurst, 2005. "Consumption versus Expenditure," Journal of Political Economy, University of Chicago Press, vol. 113(5), pages 919-948, October.
  14. Garry F. Barrett & Matthew Brzozowski, 2010. "Involuntary Retirement and the Resolution of the Retirement-Consumption Puzzle: Evidence from Australia," Social and Economic Dimensions of an Aging Population Research Papers 275, McMaster University.
  15. Sule Alan & Kadir Atalay & Thomas F. Crossley, 2008. "The Adequacy of Retirement Savings: Subjective Survey Reports by Retired Canadians," Canadian Public Policy, University of Toronto Press, vol. 34(s1), pages 95-118, November.
  16. Fisher, Jonathan D. & Johnson, David S. & Marchand, Joseph & Smeeding, Timothy M. & Torrey, Barbara Boyle, 2008. "The retirement consumption conundrum: Evidence from a consumption survey," Economics Letters, Elsevier, vol. 99(3), pages 482-485, June.
  17. Daniel Kahneman & Alan B. Krueger, 2006. "Developments in the Measurement of Subjective Well-Being," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 3-24, Winter.
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