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Saving Shortfalls and Delayed Retirement

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Author Info

  • Andrew Au

    (The Wharton School, University of Pennsylvania)

  • Olivia S. Mitchell

    (The Wharton School, University of Pennsylvania)

  • John W.R. Phillips

    (National Institute on Aging)

Abstract

Prior research has suggested that many older Americans have not saved enough to maintain consumption levels in old age. One way older persons might respond to inadequate savings would be to extend their worklives by delaying retirement. This paper examines evidence on this matter using the Health and Retirement Study, a nationally representative panel survey of people age 51-61 in 1992 followed for several years in a panel. We use the data to project household retirement assets and to determine how much more saving would be needed to preserve post-retirement consumption levels. Our research then examines the links between derived saving shortfall measures and delayed retirement patterns. Among nonmarried persons, there is evidence that larger shortfalls do produce delayed retirement, though the effect is not quantitatively large. For married couples, pre-retirement wealth shortfalls do not appear to be significantly associated with delayed retirement. Evidently couples have other means of handling saving shortfalls.

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File URL: http://www.mrrc.isr.umich.edu/publications/Papers/pdf/wp094.pdf
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Bibliographic Info

Paper provided by University of Michigan, Michigan Retirement Research Center in its series Working Papers with number wp094.

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Length: 28 pages
Date of creation: Jan 2005
Date of revision:
Handle: RePEc:mrr:papers:wp094

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  1. Olivia S. Mitchell & James Moore & John Phillips, . "Explaining Retirement Saving Shortfalls," Pension Research Council Working Papers 98-13, Wharton School Pension Research Council, University of Pennsylvania.
  2. John Sabelhaus & Joyce Manchester, 1995. "Baby Boomers and Their Parents: How Does Their Economic Well-Being Compare in Middle Age?," Journal of Human Resources, University of Wisconsin Press, vol. 30(4), pages 791-806.
  3. Olivia S. Mitchell & Gary S. Fields, 1983. "The Economics of Retirement Behavior," NBER Working Papers 1128, National Bureau of Economic Research, Inc.
  4. Laurence J. Kotlikoff & Avia Spivak, 1979. "The Family as an Incomplete Annuities Market," NBER Working Papers 0362, National Bureau of Economic Research, Inc.
  5. Alan L. Gustman & Thomas L. Steinmeier, 2000. "Retirement Outcomes in the Health and Retirement Study," NBER Working Papers 7588, National Bureau of Economic Research, Inc.
  6. Alan L. Gustman & Thomas L. Steinmeier, 2001. "Imperfect Knowledge, Retirement and Saving," Working Papers wp012, University of Michigan, Michigan Retirement Research Center.
  7. Michael Hurd & Susann Rohwedder, 2003. "The Retirement-Consumption Puzzle: Anticipated and Actual Declines in Spending at Retirement," NBER Working Papers 9586, National Bureau of Economic Research, Inc.
  8. Laurence J. Kotlikoff & Lawrence H. Summers, 1981. "The Adequacy of Savings," NBER Working Papers 0627, National Bureau of Economic Research, Inc.
  9. Eric M. Engen & William G. Gale & Cori E. Uccello, 2004. "Lifetime Earnings, Social Security Benefits, and the Adequacy of Retirement Wealth Accumulation," Working Papers, Center for Retirement Research at Boston College wp2004-10, Center for Retirement Research, revised Apr 2004.
  10. William G. Gale, 1994. "Public policies and private pension contributions," Proceedings, Federal Reserve Bank of Cleveland, pages 710-734.
  11. James F. Moore & Olivia S. Mitchell, . "Projected Retirement Wealth and Saving Adequacy," Pension Research Council Working Papers 98-1, Wharton School Pension Research Council, University of Pennsylvania.
  12. Olivia S. Mitchell & John W.R. Phillips, 2000. "Retirement Responses to Early Social Security Benefit Reductions," NBER Working Papers 7963, National Bureau of Economic Research, Inc.
  13. 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.
  14. Steven F. Venti & David A. Wise, 2004. "Aging and Housing Equity: Another Look," NBER Chapters, in: Perspectives on the Economics of Aging, pages 127-180 National Bureau of Economic Research, Inc.
  15. Alan Gustman & Olivia S. Mitchell & Thomas L. Steinmeier, . "Retirement Measures in the Health and Retirement Survey," Pension Research Council Working Papers 94-2, Wharton School Pension Research Council, University of Pennsylvania.
  16. B. Douglas Bernheim, 1989. "The Timing of Retirement: A Comparison of Expectations and Realizations," NBER Chapters, in: The Economics of Aging, pages 335-358 National Bureau of Economic Research, Inc.
  17. Eric M. Engen & William G. Gale & Cori R. Uccello, 1999. "The Adequacy of Retirement Saving," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 30(2), pages 65-188.
  18. John Karl Scholz & Ananth Seshadri & Surachai Khitatrakun, 2006. "Are Americans Saving "Optimally" for Retirement?," Journal of Political Economy, University of Chicago Press, vol. 114(4), pages 607-643, August.
  19. Mark Aguiar & Erik Hurst, 2004. "Consumption vs. Expenditure," NBER Working Papers 10307, National Bureau of Economic Research, Inc.
  20. Steven J. Haider & Melvin Stephens, 2007. "Is There a Retirement-Consumption Puzzle? Evidence Using Subjective Retirement Expectations," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 247-264, May.
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