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The Impact of Late-Career Health and Employment Shocks on Social Security and Other Wealth

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  • Richard W. Johnson
  • Gordon B.T. Mermin
  • Dan Murphy

Abstract

Although health and employment shocks are fairly common at older ages and often derail retirement savings plans, Social Security’s disability insurance, spouse and survivor benefits, and progressive benefit formula may provide important protections. By contrast, traditional employer-sponsored pension benefits may be especially vulnerable to health and employment shocks immediately before benefit take-up, because pension wealth generally grows rapidly near the end of the career and workers forfeit these increases if they separate early. This study examines the impact of disability onset and job layoffs on Social Security wealth, traditional employer-sponsored pension wealth, and other household wealth for a nationally representative sample of workers age 51 to 55 in 1992...

Suggested Citation

  • Richard W. Johnson & Gordon B.T. Mermin & Dan Murphy, 2007. "The Impact of Late-Career Health and Employment Shocks on Social Security and Other Wealth," Working Papers, Center for Retirement Research at Boston College wp2007-26, Center for Retirement Research, revised Dec 2007.
  • Handle: RePEc:crr:crrwps:wp2007-26
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    File URL: http://crr.bc.edu/working-papers/the-impact-of-late-career-health-and-employment-shocks-on-social-security-and-other-wealth/
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    References listed on IDEAS

    as
    1. Bound, John & Schoenbaum, Michael & Stinebrickner, Todd R. & Waidmann, Timothy, 1999. "The dynamic effects of health on the labor force transitions of older workers," Labour Economics, Elsevier, pages 179-202.
    2. Dwyer, Debra Sabatini & Mitchell, Olivia S., 1999. "Health problems as determinants of retirement: Are self-rated measures endogenous?," Journal of Health Economics, Elsevier, pages 173-193.
    3. James H. Stock & David A. Wise, 1990. "The Pension Inducement to Retire: An Option Value Analysis," NBER Chapters,in: Issues in the Economics of Aging, pages 205-230 National Bureau of Economic Research, Inc.
    4. Leora Friedberg, 2000. "The Labor Supply Effects of the Social Security Earnings Test," The Review of Economics and Statistics, MIT Press, pages 48-63.
    5. Richard W. Johnson & Amy J. Davidoff & Kevin Perese, 2003. "Health Insurance Costs and Early Retirement Decisions," ILR Review, Cornell University, ILR School, pages 716-729.
    6. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
    7. Kathleen McGarry, 2004. "Health and Retirement: Do Changes in Health Affect Retirement Expectations?," Journal of Human Resources, University of Wisconsin Press.
    8. Rogowski, Jeannette & Karoly, Lynn, 2000. "Health insurance and retirement behavior: evidence from the health and retirement survey," Journal of Health Economics, Elsevier, pages 529-539.
    9. Dwyer, Debra Sabatini & Mitchell, Olivia S., 1999. "Health problems as determinants of retirement: Are self-rated measures endogenous?," Journal of Health Economics, Elsevier, pages 173-193.
    10. B. Douglas Bernheim, 1987. "Social Security Benefits: An Empirical Study of Expectations and Realizations," NBER Working Papers 2257, National Bureau of Economic Research, Inc.
    11. Barbara A. Butrica & Richard W. Johnson & Karen Elizabeth Smith & C. Eugene Steuerle, 2004. "Does Work Pay at Older Ages?," Working Papers, Center for Retirement Research at Boston College wp2004-30, Center for Retirement Research, revised Nov 2004.
    12. repec:crr:crrwps:2004-30 is not listed on IDEAS
    13. Leora Friedberg & Anthony Webb, 2005. "Retirement and the Evolution of Pension Structure," Journal of Human Resources, University of Wisconsin Press.
    14. Leora Friedberg & Anthony Webb, 2005. "Retirement and the Evolution of Pension Structure," Journal of Human Resources, University of Wisconsin Press.
    15. Gary Burtless & Joseph F. Quinn, 2000. "Retirement Trends and Policies to Encourage Work Among Older Americans," Boston College Working Papers in Economics 436, Boston College Department of Economics.
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    Cited by:

    1. Jody Schimmel Hyde & April Yanyuan Wu, "undated". "The Financial Vulnerability of Former Disability Beneficiaries in Retirement," Mathematica Policy Research Reports 7414e13ae5964acdb3326e14d, Mathematica Policy Research.
    2. Alicia H. Munnell & Mauricio Soto, 2008. "The Housing Bubble and Retirement Security," Issues in Brief ib2008-8-12, Center for Retirement Research, revised Aug 2008.
    3. David C. Stapleton, 2009. "Employment Support for the Transition to Retirement: Can a New Program Help Older Workers Continue to Work and Protect Those Who Cannot?," Mathematica Policy Research Reports aca13fdc8ba2439486551946d, Mathematica Policy Research.
    4. Luc Behaghel & David M. Blau, 2012. "Framing Social Security Reform: Behavioral Responses to Changes in the Full Retirement Age," American Economic Journal: Economic Policy, American Economic Association, vol. 4(4), pages 41-67, November.
    5. repec:mpr:mprres:6248 is not listed on IDEAS
    6. Rosa Aísa & Fernando Pueyo & Marcos Sanso, 2012. "Life expectancy and labor supply of the elderly," Journal of Population Economics, Springer;European Society for Population Economics, pages 545-568.

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