A comparison of the performances of pension products that ignores long-term trends might significantly overestimate the long-term impact of volatility risks while underestimating the impact of persistent, low-frequency trends. This paper proposes a comparison making use of projection models based on the long-term risk–return tradeoff proposed by Campbell and Viceira (2005) to explicitly take into account slow-moving economic trends. In order to illustrate the approach and its implications, we discuss the capital protection provided by life-cycle target-date fund strategies and minimum guarantee strategies.

At the onset of the Covid-19 crisis, and with one of the largest and best-funded defined contribution programs in Latin America, Chile held over USD $200 bn in assets (or more than 80% of GDP). Reacting to populist pressures during the pandemic, however, the Congress gave non-retired participants three separate opportunities to tap into their retirement accounts, leaving some 4.2 million participants with zero retirement savings and draining around $50 bn from the system. This paper explores several hypotheses regarding why people withdrew their pension money early, and it also presents evidence regarding the likely impact of this short-term policy on long-term retirement wellbeing. We conclude with lessons for global policymakers seeking to protect pension assets critical for retirement security.

We examine whether an individual's inability to save in the last 12 months affects the extent to which they are concerned about their future financial security and their propensity to plan for retirement. We use an original survey based upon representative samples of working individuals in 16 countries. We show that individuals who were unable to save over the 12-month period prior to the survey are less likely to consider well-being in retirement as their major financial concern. They are also less likely to invest in supplementary pension funds than those who were able to accumulate savings. We provide evidence that these findings are robust under several specifications and are mediated by respondents' perceived income prospects and assessment of their current financial situations.

This paper documents trends over the last two decades in retirement behavior and retirement income choices of participants in TIAA, a large and mature defined contribution plan. From 2000 and 2018, the average age at which TIAA participants stopped contributing to their accounts, which is a lower bound on their retirement age, rose by 1.2 years for female and 2.0 years for male participants. There is considerable variation in the elapsed time between the time of the last contribution to and the first income draw from plan accounts. Only 40% of participants take an initial income payment within 48 months of their last contribution. Later retirement and lags between retirement and the first retirement income payout led to a growing fraction of participants reaching the required minimum distribution (RMD) age before starting income draws. Between 2000 and 2018, the fraction of first-time income recipients who took no income until their RMD rose from 10% to 52%, while the fraction of these recipients who selected a life-contingent annuitized payout stream declined from 61% to 18%. Among those who began receiving income before age 70, annuitization rates were significantly higher than among those who did so at older ages. Aggregating across all income-receiving beneficiaries at TIAA, not just new income recipients, the proportion with a life annuity as part of their payout strategy fell from 52% in 2008 to 31% in 2018. By comparison, the proportion of all income recipients taking an RMD payment rose from 16% to 29%. About one-fifth of retirees received more than one type of income; the most common pairing was an RMD and a life annuity. In the later years of our sample, the RMD was becoming the de facto default distribution option for newly retired TIAA participants.

The COVID-19 pandemic triggered a large and immediate drop in employment among U.S. workers, along with major expansions of unemployment insurance (UI) and work from home. We use Current Population Survey and Social Security application data to study employment among older adults and their participation in disability and retirement insurance programs through the second year of the pandemic. We find ongoing improvements in employment outcomes among older workers in the labor force, along with sustained higher levels in the share no longer in the labor force during this period. Applications for Social Security disability benefits remain depressed, particularly for Supplemental Security Income. In models accounting for the expiration of expanded UI, we find some evidence that the loss of these additional financial supports resulted in an increase in disability claiming. Social Security retirement benefit claiming is approximately 3% higher during the second year of the pandemic.

State and local employees comprise a significant proportion of the workforce and are largely covered by defined benefit pensions. Many of these retirement plans have been facing funding gaps, but legal restrictions often prevent them from reducing benefits for current employees. However, retirement plans can reduce liabilities by changing cost-of-living adjustments, or COLAs, which are commonly applied to benefits each year to allow retirees to maintain purchasing power in retirement. In this study, we examine the prevalence of COLAs in public sector retirement plans through original data collection for 49 plans in 30 states, which cover approximately 52% of public sector workers overall. Among these samples, on average 45% of workers each year experienced some change in COLAs between 2005 and 2018, with more than half of these workers experiencing negative changes. We consider stylized examples of public sector workers subject to reductions in COLAs to understand how COLAs may affect workers’ retirement decisions. Our analysis suggests that eliminating a 3% COLA could delay retirement of affected workers by approximately 4.5 months.

This article examines the G-Fund, which is one of the five funds in the federal government employee retirement Thrift Savings Plan. The G-Fund is held as internal debt by the U.S. Department of Treasury. Our examination shows that the fund balance is exclusively composed of 1-day notes that are redeemed/reissued every business day, generating $55 trillion in annual debt reissuance. We also show that the fund balance drops substantially as resources are transferred to the general fund when the government is constrained by a debt ceiling and returns to pre-constraint levels when the ceiling is expanded/suspended.

This paper examines inter-industry patterns of the employment of older workers over the last 20 years to understand where employment opportunities have grown the most. The underlying premise is that firms strategically align their age mix depending on production function and labor cost parameters. The industries that had the largest increases in the percentage of older workers were those that had the broadest pension coverage and those that made the greatest use of high-tech capital. There also is evidence in 2001–07 that the percentage of older workers increased more in the industries most exposed to increased Chinese imports.

This paper uses the Current Population Survey to study older workers' transitions out of employment and into retirement during the first year of the pandemic. We find that, among workers ages 55 to 79, the likelihood of leaving employment over the course of a year rose by 6.7 percentage points, a 43-percent increase over baseline. Workers without a college degree, Asian–Americans, those whose jobs were not amenable to social distancing, and part-time workers saw disproportionate impacts. In contrast, the likelihood of retiring increased by 1 percentage point, and there was no immediate retirement boom for full-time workers under 70.

Disability-free life expectancy had been rising continuously in the United States until 2010, suggesting working longer as a solution for those financially unprepared for retirement. However, recent developments suggest improvements in working life expectancy have stalled, especially for minorities and those with less education. This paper uses data from the National Vital Statistics System, the American Community Survey, and the National Health Interview Survey to assess how recent trends, up to 2018, in institutionalization, physical impediments to work, and mortality have affected working life expectancy for men and women age 50, by race and education.

We study the impact of changing the existing terminology to describe the rules governing Social Security retirement benefits. We provided respondents from a nationally representative online panel with information pertinent to the decision of when to claim Social Security retirement benefits. The content of the information treatments was identical for all respondents, but some were randomly given an alternative set of terms to refer to the key claiming ages (the experimental treatment group), while others were given the current terms (the control group). Despite the minimal nature of the change, there were significant differences in outcomes. Those in the treatment group spent less time reading the information, but their understanding of the Social Security program improved more than the control group. In addition, the treatment delayed retirement claiming intentions by an average of about two and a half months and increased the recommended claiming age to vignette characters by a similar magnitude. The effects were particularly strong for those with low levels of financial literacy. The relative gains in knowledge persisted several months after the treatment.

We administered the FINRA Foundation's National Financial Capability Study questionnaire to members of the RAND American Life Panel in 2012 and 2018. Using this unique, longitudinal data set, we investigate the evolution of financial literacy over time and shed light on the effect of financial knowledge on financial outcomes. Over a six-year observation period, financial literacy appears to be rather stable, with a slight tendency to decline at older ages. Importantly, financial literacy has significant predictive power for future financial outcomes, even after controlling for baseline outcomes and a wide set of demographics and individual characteristics that influence financial decision making.

We explore whether ageist stereotypes in job ads are detectable using machine-learning methods measuring the linguistic similarity of job-ad language to ageist stereotypes identified by industrial psychologists. We then conduct an experiment to evaluate whether this language is perceived as biased against older workers searching for jobs. We find that job-ad language classified by the machine-learning algorithm as closely related to ageist stereotypes is perceived by experimental subjects as biased against older job seekers. These methods could potentially help enforce anti-discrimination laws by using job ads to predict or identify employers more likely to be engaging in age discrimination.

This study documents the credit outcomes of older adults immediately before and after the onset of the COVID-19 pandemic in the United States. On average, older adults experienced larger reductions in total household debt relative to younger adults. However, there is significant heterogeneity, where older adults with higher incomes experienced the largest declines, and lower-income older adults experienced an increase in total debt. Overall, these data highlight important trends in the credit experiences of older adults that may affect their future financial security.

Is the trust that participants have in their pension fund affected by its funding ratio (i.e., asset/liabilities ratio)? Based on survey, carried out in October 2021, among Dutch pension fund participants we link our survey data to the funding ratio of their pension fund as registered by the pension regulator. First, we show that the level of the funding ratio of their pension fund is positively associated with the trust level of participants. Pension funds with large buffers are associated with a high level of trust. Second, sub-group analyses show that the trust of younger participants is weakly related to the level of the funding ratio and this association is strong and positive for older (55+)/retired participants. It suggests that an interest in or awareness about the financial health of one's pension fund is associated with a higher responsiveness of participants in terms of trust. And third, firm-based pension funds enjoy a higher level of trust compared to sector-based pension funds.

We analyze how taxes affect the choice between a life-long annuity and a one-off lump sum payment, the so-called annuitization decision. Using administrative data from a large Swiss pension fund, we impute taxes for the lump sum and the life-long annuity option. We show that taxes can explain a significant part of the variation in annuity rates. Exploiting kinks in the tax schedule of the one-off lump sum, we further find evidence for tax optimization strategies. Our findings suggest that individuals react strongly to tax incentives when making retirement choices.

Balancing caregiving duties and employment can be both financially and emotionally burdensome, especially when care is provided to a spouse at home. Caregiving subsidies can play a role in helping caregivers to cope with such duties. This paper demonstrates how providing financial respite for caregivers can influence individuals' decisions to retire early. We investigate the impact of a reform that extended long-term care (LTC) benefits (in the form of subsidies and supports) on the intention of a caregiving spouse to retire early in Spain. We subsequently examine the effect of austerity spending cuts reducing such publicly funded benefits, and we compare the estimates to the effects of an early retirement reform among private sector workers around the same time. Our preferred estimates suggest evidence of a 10pp reduction in early retirement intentions after the extension of LTC benefits even though the effect is heterogeneous by type of benefit. Consistently, austerity spending cuts in benefits are found to weaken retirement intentions. Even more importantly, our estimates suggest that cuts in caregiving subsidies exert a much stronger effect on early retirement intentions than actual early retirement reforms.

One of the most important financial decisions that pension participants make concerns how they access their pension assets when they terminate employment with their plan sponsor. Their choices depend both on own preferences and the options offered by their retirement plan. This paper examines both past and future pension withdrawal choices for those with defined benefit (DB) and defined contribution (DC) pensions, separately. Our data are drawn from a set of pension distribution questions we fielded in the Understanding American Study. Results show significant differences in distribution choices based on the type of retirement plan, with individuals covered by DB plans significantly more likely to select annuities compared to similar employees covered by DC plans. We also find differences in how higher annual income affects annuity choices based on coverage by DB plans. Individuals with lower levels of financial literacy and lower annual income have less knowledge of basic pension characteristics.

Many nations incentivize retirement saving by letting workers defer taxes on pension contributions, imposing them when retirees withdraw their funds. Using a dynamic life-cycle model, we show how ‘Rothification’ – that is, taxing 401(k) contributions rather than payouts – alters saving, investment, consumption, and Social Security claiming patterns. We find that taxing pension contributions instead of withdrawals leads to delayed retirement, somewhat lower lifetime tax payments, and relatively small reductions in consumption. Indeed, the two tax regimes generate quite similar relative inequality metrics: the relative consumption inequality ratio under taxed-exempt-exempt (TEE) is only 4% higher than that in the exempt-exempt-taxed (EET) case. Moreover, results indicate that the Gini measures are also strikingly similar under the EET and the TEE regimes for lifetime consumption, cash on hand, and 401(k) assets, differing by only 1–4%. While tax payments are higher early in life under the TEE regime, they are slightly lower in the long run. Moreover, higher EET tax payments are also accompanied by higher volatility. We therefore find few reasons for policymakers to favor either tax approach on egalitarian or revenue-enhancing grounds.

We study causal effects of two early retirement reforms. Reform 1 increased normal retirement age stepwise from 60 to 63. Simultaneously, it became possible to use early retirement with benefit discounts. Reform 2 increased the age of early retirement stepwise from 60 to 63. We investigate behavioral responses to the reforms using administrative data and difference-in-differences strategies. We find strong and significant causal effects of both reforms. Individuals postponed retirement, stayed employed longer, postponed unemployment, and shifted to alternative pathways into retirement. The overall use of the retirement system declined by about 1.5 and 2 months per person after each of the two reforms. Individuals with low pension wealth and those who were affected immediately by the reform responded more strongly.