"Social Security in a Changing Environment: Findings from the Retirement Research Center at the National Bureau of Economic Research" 

Social Security Bulletin, 69, No. 4, pp. 65-81, 2009

DAVID A. WISE, National Bureau of Economic Research (NBER), Harvard University - John F. Kennedy School of Government
Email: dwise@nber.org
RICHARD WOODBURY, National Bureau of Economic Research (NBER)
Email: rgwoodbury@aol.com

Since September 2003, the Retirement Research Center at the National Bureau of Economic Research has conducted a coordinated series of investigations on Social Security in a changing environment and the potential routes to sustainable solvency. The Center supports extensive collaborative research over a multiyear horizon to achieve a more fully integrated understanding of Social Security's challenges and the changing environment in which it operates. This article is an overview of the studies completed since the Center's inception.

"The Effective Target of the Social Security Disability Benefits Reform Act of 1984" 

Center for Policy Research Working Paper No. 119

PERRY SINGLETON, Syracuse University - Department of Economics
Email: psinglet@syr.edu

A substantial portion of the rise in Social Security Disability Insurance rolls since 1984 has been attributed to the Social Security Disability Benefits Reform Act. Using data from the National Health Interview Survey, I examine whom the Act effectively targeted. The analysis shows that new enrollees were demonstrably taller than previous enrollees, suggesting that the Act expanded eligibility to individuals in better health and socioeconomic circumstances. However, the estimated effect of increased SSDI eligibility on employment is low, suggesting that the Act targeted males who would have otherwise been unemployed.

"The Effect of Uncertain Labor Income and Social Security on Life-Cycle Portfolios" 

NBER Working Paper No. w15682

RAIMOND MAURER, University of Frankfurt - Faculty of Business and Economics
Email: Rmaurer@wiwi.uni-frankfurt.de
OLIVIA S. MITCHELL, University of Pennsylvania - Insurance & Risk Management Department, National Bureau of Economic Research (NBER)
Email: mitchelo@wharton.upenn.edu
RALPH ROGALLA, Goethe University Frankfurt - Department of Finance
Email: rogalla@wiwi.uni-frankfurt.de

This paper examines how labor income volatility and social security benefits can influence lifecycle household portfolios. We examine how much the individual optimally saves and where, taking into account liquid financial wealth and annuities, and stocks as well as bonds. Higher labor income uncertainty and lower old-age benefits boost demand for stable income in retirement, but also when young. In addition, a declining equity glide path with age is appropriate for the worker with low income uncertainty; for the high income risk worker, equity exposure rises until retirement. We also evaluate how differences in social security benefits can influence retirement risk management.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

"What is an Adequate Standard of Living during Retirement?" 

CESifo Working Paper Series No. 2893

JOHANNES BINSWANGER, Netspar and CentER, Tilburg University
Email: J.Binswanger@uvt.nl
DANIEL SCHUNK, Institute for Empirical Research in Economics, University of Zurich
Email: mail@daniel-schunk.de

Many economists and policy-makers argue that households do not save enough to maintain an adequate standard of living during retirement. However, there is no consensus on the answer to the underlying question about what this standard should be, despite the fact that it is crucial for the design of saving incentives and pension systems. We address this question with a randomized survey design, individually tailored to each respondent’s financial situation, and conducted both in the U.S. and the Netherlands. Key findings include the following. Adequate levels of retirement spending exceed 80 percent of working life spending for a majority of respondents. Minimum acceptable replacement rates depend strongly on income. Households in the Netherlands are much more risk averse than U.S. households

"Implications of the Financial Crisis for Long Run Retirement Security" 

Pension Research Council WP 2010-02

OLIVIA S. MITCHELL, University of Pennsylvania - Insurance & Risk Management Department, National Bureau of Economic Research (NBER)
Email: mitchelo@wharton.upenn.edu

Managing retirement risk has become extraordinarily difficult in this era of financial turmoil, global inter-linkages, and global population aging. It is particularly fraught since consumers must now engage in long-term contracts with themselves, employers, financial institutions, and governments, regarding the future of retirement financing. Moreover, these agreements will need to remain in force extraordinarily long, for fifty or even one hundred years into the future. This note reviews what institutions and instruments that have a successful track record in retirement risk management over such a long time horizon.

"Retire Later or Work Harder?" 

IZA Discussion Paper No. 4720

DAVID N.F. BELL, University of Stirling - Department of Economics, Institute for the Study of Labor (IZA)
Email: D.N.F.BELL@STIR.AC.UK
ROBERT A. HART, University of Stirling - Department of Economics, Institute for the Study of Labor (IZA)
Email: r.a.hart@stir.ac.uk

We compare two policies of increasing British state pension provision: (a) increase the pensionable age of men and women, (b) maintain the existing retirement age but require older workers to work longer per-period hours. There are reasons for policy makers to give serious consideration to the under-researched alternative (b). First, from wage - hours contract theory we know that there are potential gains to both workers and firms of allowing hours to rise in work experience. Second, there is strong evidence that job satisfaction rises in age. Third, there has in any case been a significant overall increase in the hours supplied by older workers in the last two decades. We review the relevant theory, model the trade-off between later retirement versus increased work intensity, produce relevant background facts, and provide estimates of the policy trade-offs.