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What People Don't Know About Their Pensions and Social Security: An Analysis Using Linked Data from the Health and Retirement Study

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Author Info
Alan L. Gustman
Thomas L. Steinmeier
Abstract

Pension plan descriptions from respondents to the 1992 Health and Retirement Study are compared with descriptions obtained from their employers. Earnings histories reported by respondents are compared with earnings histories from the Social Security Administration. The probability of linking employer pension data, which is two thirds for current jobs, and of obtaining permission to link an earnings history, which is over 70 percent, are not well explained by respondent characteristics. Half of respondents with linked pension data correctly identify plan type, and fewer than half identify, within one year, dates of eligibility for early and normal retirement benefits. Benefit reduction rates are essentially not reported. Respondents do better in reporting pension values, but the unexplained variation is still considerable. In contrast, respondent reported values, together with other observables, account for 80 percent of the variation in pension values and 75 percent of the variation in covered earnings measured from linked records. Thus prospects are good for imputing plan values, but not for imputing the location or size of early retirement incentives. Our findings raise questions about how well respondents understand complex pension and Social Security rules.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7368.

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Date of creation: Sep 1999
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Handle: RePEc:nbr:nberwo:7368

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D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. B. Douglas Bernheim, 1987. "Social Security Benefits: An Empirical Study of Expectations and Realizations," NBER Working Papers 2257, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Alan L. Gustman & Olivia S. Mitchell & Andrew A. Samwick & Thomas L. Steinmeier, . "Evaluating Pension Entitlements," Pension Research Council Working Papers 98-20, Wharton School Pension Research Council, University of Pennsylvania.
  3. Courtney Coile & Jonathan Gruber, 2000. "Social Security and Retirement," NBER Working Papers 7830, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Vincent Hildebrand, 2001. "Wealth Accumulation of US Households: What Do We Learn from the SIPP Data?," Social and Economic Dimensions of an Aging Population Research Papers 41, McMaster University. [Downloadable!]
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  2. Arie Kapteyn & Constantijn Panis, 2003. "The Size and Composition of Wealth Holdings in the United States, Italy, and the Netherlands," Working Papers 03-05, RAND Corporation Publications Department. [Downloadable!]
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  3. Irena Dushi & Marjorie Honig, 2007. "Are 401(k) Saving Rates Changing? Cohort/Period Evidence from the Health and Retirement Study," Working Papers wp160, University of Michigan, Michigan Retirement Research Center. [Downloadable!]
  4. Edward N. Wolff, 2006. "The Adequacy of Retirement Resources among the Soon-to-Retire, 1983-2001," Economics Working Paper Archive wp_472, Levy Economics Institute, The. [Downloadable!]
  5. Steven Haider & Gary Solon, 2000. "Non Random Selection in the HRS Social Security Earnings Sample," Working Papers 00-01, RAND Corporation Publications Department. [Downloadable!]
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  6. Jeff Dominitz & Charles F. Manski & Jordan Heinz, 2002. "Social Security Expectations and Retirement Savings Decisions," NBER Working Papers 8718, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Alberto Arenas de Mesa & David Bravo & Jere R. Behrman & Olivia S. Mitchell & Petra E. Todd, 2006. "The Chilean Pension Reform Turns 25: Lessons From the Social Protection Survey," NBER Working Papers 12401, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Edward N. Wolff, 2005. "Is the Equalizing Effect of Retirement Wealth Wearing Off?," Economics Working Paper Archive wp_420, Levy Economics Institute, The. [Downloadable!]
  9. Leora Friedberg & Anthony Webb, 2000. "The Impact of 401(k) Plans on Retirement," University of California at San Diego, Economics Working Paper Series 2000-30, Department of Economics, UC San Diego. [Downloadable!]
  10. Thomas L. Hungerford, 2003. "U.S. Workers' Investment Decisions for Participant-Directed Defined Contribution Pension Assets," Economics Working Paper Archive 375, Levy Economics Institute, The. [Downloadable!]
  11. Sewin Chan & Ann Huff Stevens, 2001. "Retirement Incentives and Expectations," NBER Working Papers 8082, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  12. Annamaria Lusardi & Ricardo Cossa & Erin L. Krupka, 2000. "Savings of young parents," Working Paper Series WP-00-23, Federal Reserve Bank of Chicago. [Downloadable!]
  13. Irena Dushi & Anthony Webb, 2004. "Annuitization: Keeping Your Options Open," Working Papers, Center for Retirement Research at Boston College 2004-04, Center for Retirement Research. [Downloadable!]
  14. Leora Friedberg & Anthony Webb, 2006. "Persistence in Labor Supply and the Response to the Social Security Earnings Test," Working Papers, Center for Retirement Research at Boston College wp2006-27, Center for Retirement Research, revised Dec 2006. [Downloadable!]
  15. Annamaria Lusardi, 2000. "Explaining Why So Many Households Do Not Save," JCPR Working Papers 203, Northwestern University/University of Chicago Joint Center for Poverty Research.
  16. Leora Friedberg & Michael T. Owyang, 2004. "Explaining the evolution of pension structure and job tenure," Working Papers 2002-022, Federal Reserve Bank of St. Louis. [Downloadable!]
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