2007
Money in Motion: Dynamic Portfolio Choice in Retirement
WP 2007-152 , UM07-17
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…
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Projecting Behavioral Responses to the Next Generation of Retirement Policies
WP 2007-153 , UM05-02
This paper examines retirement and related behavioral responses to policies that on average are actuarially neutral. Many conventional models predict that actuarially neutral policies will not affect retirement behavior. In contrast, our model allows those with high time preference rates…
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Winners and Losers: 401(k) Trading and Portfolio Performance
WP 2007-154 , UM07-11
Few previous studies have explored how individuals manage their defined contribution (DC) pension plan assets, even though such plans constitute an increasingly important component of retirement wealth. Using a unique new dataset on over one million active 401(k) plan participants…
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The Effect of Retirement Incentives on Retirement Behavior: Evidence from the Self-Employed in the United States and England
WP 2007-155 , UM07-18
In this paper, we examine how public and private pension and health insurance systems affect the retirement transitions. In many countries, public and private pension eligibility, as well as access to health insurance varies between self-employed and wage and salary…
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A Longitudinal Analysis of Entries and Exits of the Low-Income Elderly to and from the Supplemental Security Income Program
WP 2007-156 , UM07-02
This paper is the first to analyze eligibility and participation spells and estimate dynamic models of SSI participation by the aged. We first describe eligibility and participation spells and estimate competing-risk models of the determinants of transitions. Next, we…
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Financial Literacy and Retirement Planning: New Evidence from the Rand American Life Panel
WP 2007-157 , UM07-10
The present paper introduces a new dataset, the Rand American Life Panel (ALP), which offers several appealing features for an analysis of financial literacy and retirement planning. It allows us to evaluate financial knowledge during workers’ prime earning years…
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Subjective Survival Probabilities in the Health and Retirement Study: Systematic Biases and Predictive Validity
WP 2007-159 , UM07-19
Recent research has demonstrated that retirement planning and well-being are closely tied to probabilistic forecasts about future events. Using longitudinal data from the Health and Retirement Study, I show that individuals’ subjective survival forecasts exhibit systematic biases relative to life…
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Children and Household Wealth
WP 2007-158 , UM07-12
This paper examines the effects of children on consumption and wealth. To anchor intuition, we develop implications using a simple permanent income model with no uncertainty and complete markets. But this framework does not come close to matching the distribution…
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The Impact of Private Participation on Disability Costs: Evidence from Chile
WP 2007-161 , UM07-14
Social security systems in many countries face problems of high and escalating disability costs. This paper analyzes how disability costs have been controlled in Chile. The disability insurance system in Chile is much less well-known than the pension part,…
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Are 401(k) Saving Rates Changing? Cohort/Period Evidence from the Health and Retirement Study
WP 2007-160 , UM07-05
This research examines the determinants of eligibility and participation in 401(k) plans using two cross-sections of data from the Health and Retirement Study. Our sample consists of workers ages 51-56 representing two cohorts: the original HRS cohort born 1931-41, first…
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