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SOCIAL SCIENCE RESEARCH NETWORK
EMPLOYEE BENEFITS, COMPENSATION & PENSION LAW ABSTRACTS
Sponsored by Pension Governance, LLC
Vol. 8, No. 9: March 8, 2007
Editor: PAMELA J. PERUN
Urban Institute
PAMELA@PLANETNOW.COM
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Topic of This Issue:
Retirement
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T A B L E O F C O N T E N T S
"Worker Characteristics, Job Characteristics, and Opportunities
for Phased Retirement"
ROBERT HUTCHENS
Cornell University - School of Industrial and Labor
Relations, Bard College - The Levy Economics Institute,
Institute for the Study of Labor (IZA)
"Tax-Deferred Savings and Early Retirement"
GAOBO PANG
Watson Wyatt Worldwide
"Money in Motion: Dynamic Portfolio Choice in Retirement"
WOLFRAM J. HORNEFF
Goethe University Frankfurt - Department of Finance
RAIMOND MAURER
University of Frankfurt - Faculty of Business and
Economics
OLIVIA S. MITCHELL
University of Pennsylvania - Insurance & Risk Management
Department, National Bureau of Economic Research (NBER)
MICHAEL STAMOS
Goethe University Frankfurt
"How are New Retirees Doing Financially in Retirement?"
CRAIG COPELAND
Employee Benefit Research Institute (EBRI)
"Survey Finds Federal Workers Share Poor Retirement Planning with
All Workers, but Have More Savings"
JOHN A. MACDONALD
Employee Benefit Research Institute (EBRI)
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"Worker Characteristics, Job Characteristics, and Opportunities
for Phased Retirement"
IZA Discussion Paper No. 2564
Contact: ROBERT HUTCHENS
Cornell University - School of Industrial and Labor
Relations, Bard College - The Levy Economics
Institute, Institute for the Study of Labor (IZA)
Email: rmh2@cornell.edu
Auth-Page: http://ssrn.com/author=138650
Full Text: http://ssrn.com/abstract=960013
ABSTRACT: This paper uses a telephone survey of 950 employers to
examine employer-side restrictions on phased retirement. Not only
did the survey collect information on establishment level
policies, it also asked questions about a specific worker's
opportunity for phased retirement. The paper uses these data to
first establish that employers are selective when offering
opportunities for phased retirement. It then examines what worker
and job characteristics are particularly important in the
selection process.
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"Tax-Deferred Savings and Early Retirement"
Contact: GAOBO PANG
Watson Wyatt Worldwide
Email: panggb@gmail.com
Auth-Page: http://ssrn.com/author=392380
Full Text: http://ssrn.com/abstract=958262
ABSTRACT: This paper analyzes the effects of tax-deferred
accounts (TDAs) in a stochastic life-cycle model. The simulations
reveal that conventional savings (CSAs) serve mainly for
liquidity and TDAs for retirement and bequests. The tax
incentives are generally effective in stimulating new savings for
the middle and upper income groups. TDAs facilitates wealth
accumulation, which perhaps unintentionally encourages earlier
retirement. TDAs fail to induce new savings and affect the
retirement choice for impatient and low-income individuals since
they face lower marginal tax rates and have limited resources to
take advantage of TDAs. They tend to retire and claim Social
Security early.
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"Money in Motion: Dynamic Portfolio Choice in Retirement"
Pension Research Council Working Paper No. 2007-7
Contact: WOLFRAM J. HORNEFF
Goethe University Frankfurt - Department of Finance
Email: horneff@finance.uni-frankfurt.de
Auth-Page: http://ssrn.com/author=495528
Co-Author: RAIMOND MAURER
University of Frankfurt - Faculty of Business and
Economics
Email: Rmaurer@wiwi.uni-frankfurt.de
Auth-Page: http://ssrn.com/author=98155
Co-Author: OLIVIA S. MITCHELL
University of Pennsylvania - Insurance & Risk
Management Department, National Bureau of Economic
Research (NBER)
Email: mitchelo@wharton.upenn.edu
Auth-Page: http://ssrn.com/author=41556
Co-Author: MICHAEL STAMOS
Goethe University Frankfurt
Auth-Page: http://ssrn.com/author=495541
Full Text: http://ssrn.com/abstract=962720
ABSTRACT: Retirees confront the difficult problem of how to
manage their money in retirement so as to not outlive their funds
while continuing to invest in capital markets. We posit a dynamic
utility maximizer who makes both asset location and allocation
decisions when managing her retirement financial wealth and
annuities, and we prove that she can benefit from both the equity
premium and longevity insurance in her retirement portfolio. Even
without bequests, she will not fully annuitize; rather, her
optimal stock allocation amounts initially to more than half of
her financial wealth and declines with age. Welfare gains from
this strategy can amount to 40 percent of financial wealth
(depending on risk parameters and other resources). In practice,
it turns out that many retirees will do almost as well by
purchasing a variable annuity invested 60/40 in stocks/bonds.
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"How are New Retirees Doing Financially in Retirement?"
EBRI Issue Brief, No. 302, February 2007
Contact: CRAIG COPELAND
Employee Benefit Research Institute (EBRI)
Email: COPELAND@EBRI.ORG
Auth-Page: http://ssrn.com/author=255137
Full Text: http://ssrn.com/abstract=963464
ABSTRACT: Although there has been extensive analysis of the
accumulation of retirement assets in the United States, limited
research has been done on how quickly Americans use their assets
in retirement. This paper examines the cohort that has for the
most part reached the normal retirement age (65) for Social
Security and Medicare eligibility in the last 10-15 years. The
path of asset use and change in income that this cohort has
experienced is examined to see if this group is on the right path
to a financially secure retirement. The right path would mean
that less than 5 percent of assets would need to be spent each
year of retirement in order for the individual to have a high
likelihood of not running out of assets for 30 years. This study
focuses on changes in wealth and income over the period of
1992-2004 among those born from 1931 to 1941 (those currently
between ages 65 and 75). Using the Health and Retirement Study,
the same group of individuals can be followed to see the rate of
change in their income, total wealth, financial wealth, and
individual retirement account (IRA) wealth. Therefore, it can be
determined if these new retirees are experiencing declining
income, declining wealth, or both. Furthermore, the average
annual change in these variables is calculated to see if either
of these declines is at a slow enough rate that would prevent
individuals from outliving their wealth. The data show that most
new retirees are reasonably maintaining their income and assets,
but those who are losing money are losing it fast.
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"Survey Finds Federal Workers Share Poor Retirement Planning with
All Workers, but Have More Savings"
EBRI Notes, Vol. 27, No. 12, December 2006
Contact: JOHN A. MACDONALD
Employee Benefit Research Institute (EBRI)
Email: macdonald@ebri.org
Auth-Page: http://ssrn.com/author=510965
Full Text: http://ssrn.com/abstract=951807
ABSTRACT: The U.S. Office of Personnel Management conducted an
online survey of federal workers in mid-2005 to measure the
retirement readiness of civilian federal workers. Results of
OPM's Retirement Readiness Survey (RRS) were made public during
the summer of 2006, and allow a number of comparisons between the
retirement preparations and savings habits of federal workers and
American workers as a whole, as measured by the 2005 Retirement
Confidence Survey (RCS) conducted by the Employee Benefit
Research Institute (EBRI) and Mathew Greenwald & Associates. This
paper contrasts the findings of OPM's Retirement Readiness Survey
with the 2005 Retirement Confidence Survey sponsored by EBRI and
Mathew Greenwald & Associates.
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