UM22-18 : Understanding Racial Disparities in Financial Preparedness for Retirement
To understand racial disparities in retirement age and financial preparedness, we construct a model of labor supply, retirement, and savings over the life cycle where all parameters, including preferences for time and risk and the stochastic processes of marriage, fertility, mortality, health and wages, are allowed to vary by race. The model will be estimated by fitting the race-specific profiles of marriage, fertility, labor supply, wages, health, mortality and wealth over the life cycle. The estimated model will be used to quantify the contribution of each race-specific factor mentioned above to the racial differences in retirement age and financial preparedness. The results would be informative on how to bridge the racial gap in retirement preparedness.