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Author : Jack L. VanDerhei
Publisher :
ISBN 13 :
Total Pages : 31 pages
Book Rating : 4.:/5 (352 download)
Download or read book Risk Aversion and Retirement Income Adequacy written by Jack L. VanDerhei and published by . This book was released on 1995 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Sylvester J. Schieber
Publisher :
ISBN 13 :
Total Pages : 128 pages
Book Rating : 4.:/5 (431 download)
Download or read book Retirement Income Adequacy at Risk written by Sylvester J. Schieber and published by . This book was released on 1994 with total page 128 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Jack VanDerhei
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book A Post-Crisis Assessment of Retirement Income Adequacy for Baby Boomers and Gen Xers written by Jack VanDerhei and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The analysis in this paper was designed to answer two questions: (1) What percentage of U.S. households became at risk of insufficient retirement income as a result of the financial market and real estate crisis in 2008 and 2009?; (2) Of those who are at risk, what additional savings do they need to make each year until retirement age to make up for their losses from the crisis? The results are from the 2010 EBRI Retirement Security Projection Model® by the Employee Benefit Research Institute. Key findings of the analysis include the following: Range at risk: The percentage of households that would not have been “at risk” without the 2008-2009 crisis but that ended up “at risk” varies from a low of 3.8 percent to a high of 14.3 percent. 50/50 chance of adequacy: Looking at all Early Boomer households that would need to save an additional amount (over and above the savings already factored into the baseline model), the median percentage of additional compensation for these households desiring a 50 percent probability of retirement income adequacy would be 3.0 percent of compensation each year until retirement age to account for the financial and housing market crisis in 2008 and 2009. 90 percent chance of adequacy: Looking at all Early Boomer households that would need to save an additional amount (over and above the savings already factored into the baseline model), the median percentage of additional compensation for these households desiring a 90 percent probability of retirement income adequacy would be 4.3 percent of compensation. Range of adequacy: Looking only at Early Boomer households that would need to save an additional amount (over and above the savings already factored into the baseline model), that had account balances in defined contribution plans and IRAs as well as exposure to the real estate crisis in 2008 and 2009, shows a median percentage of 5.6 percent for a 50 percent probability and 6.7 percent for a 90 percent probability of retirement income adequacy.
Author : Youngkyun Park
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Retirement Income Adequacy With Immediate and Longevity Annuities written by Youngkyun Park and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper updates with recent information and estimates on retirement and health care expenditures a previous EBRI analysis (from 2006), which quantified how different types of risk (investment income, longevity, and long-term care risk), asset allocation, and percentage of annuitization affect retirement income adequacy. It analyzes how differently immediate and longevity annuities can affect probable income adequacy in retirement by taking into account long-term health care expenditures. Specifically, it attempts to find the optimal level of annuitization and asset allocation that would provide a desired level of confidence that individuals will have sufficient retirement income, based on the three different types of risk: investment income, longevity, and long-term care. Immediate annuities, as the name implies, begin distributions to the owner as soon as they are purchased; longevity annuities delay distributions to a specified later age, to help protect the owner against the risk of outliving his or her assets. Key findings include the following: Annuitization by using either immediate or longevity annuities appears to be more effective for retirees with low income than those with high income to reach a desired level of retirement income adequacy under certain conditions. As previous research has shown, adding in retiree health and long-term care costs to the retirement calculation dramatically increases estimated retirement costs - and the initial retirement wealth needed to finance those costs. The impact of an immediate annuity on retirement income adequacy: Simulation results show that for a male retiring at 65 facing investment and longevity risk, who desires a 90 percent chance of retirement income adequacy with an immediate annuity, could optimally achieve that target by fully annuitizing his initial retirement wealth regardless of different equity allocations in his portfolio. However, if he is assumed to be facing investment, longevity, and long-term care risk, he would need to annuitize 80-90 percent (not 100 percent) of his initial retirement wealth; some portion of his initial retirement wealth should be reserved to finance unexpected long-term care costs. The impact of a longevity annuity on retirement income adequacy: To achieve the same (90 percent) chance of retirement income adequacy with a longevity annuity, simulation results show that when the retiree faces all the three types of risk (investment, longevity, and long-term care risk), he should increase the allocation of his initial retirement wealth to both a longevity annuity and equities in his portfolio, compared with when he faces only investment and longevity risk. The increased allocations to a longevity annuity and equities are to cover the unexpected significant long-term care costs.
Author : Jack VanDerhei
Publisher :
ISBN 13 :
Total Pages : 36 pages
Book Rating : 4.:/5 (129 download)
Download or read book Measuring Retirement Income Adequacy written by Jack VanDerhei and published by . This book was released on 2006 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: A key weakness of many retirement income models is that they use average estimates for life expectancy, and, consequently, provide workers with only a 50 percent chance of having adequate income in retirement. The Employee Benefit Research Institute (EBRI) has developed a new model - the EBRI/ERF Retirement Security Projection Modelreg; (RSPM) - that incorporates a wide range of data in order to produce a far more inclusive and refined projection of likely retirement income. In projecting retirement income needs, the new EBRI model incorporates three of the most critically important, but difficult-to-model, retirement risks: investment risk, or how individuals' assets will perform during retirement; longevity risk, or how long an individual expects to live; and catastrophic health care costs, which have the potential to wipe out retirement savings. The EBRI model finds that the amount of money Americans will need for an adequate retirement varies widely based on individual factors and often is substantially higher than previously estimated. This paper presents the results obtained by utilizing the concepts already adopted by RSPM for the entire population of certain age cohorts and applying them to stylized examples. These results will provide useful information for individuals attempting to include such crucial factors as longevity, investment, and health care risk into their retirement planning process.This paper is the second of a two-part series measuring retirement income adequacy. A quot;Part 1quot; paper by EBRI (VanDerhei, EBRI Notes, September 2004) reviewed how replacement rates have traditionally been used to establish minimum targets for future retirees by calculating the amount needed to provide the same amount of after-tax income in retirement as that received prior to retirement after adjusting for differences in savings, age, and work-related expenses.
Author : HELEN T HUYNH
Publisher :
ISBN 13 :
Total Pages : 70 pages
Book Rating : 4.:/5 (128 download)
Download or read book THE CHANGES AND CONTRIBUTORS TO THE PERCEPTION OF RETIREMENT INCOME ADEQUACY written by HELEN T HUYNH and published by . This book was released on 2019 with total page 70 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the contributing factors that influence the variation in the perception of retirement income adequacy, analyzing U.S. households who are in the nearing retirement stage (age 55-64) in 2007 along with U.S. households who are in the first stage of retirement (age 65-74) in 2016, within the Survey of Consumer Finances. This study performs pair-matching or one-to-one propensity score matching of the cohort nearing retirement in the 2007 SCF dataset with those of the first stage of retirement in the 2016 SCF dataset who share a similar value of the propensity score. Statistically, these are the same households nine years later. Results show that of those households in the near retirement stage, 55.80 percent perceive their retirement to be adequate, while 72.20 percent of those in the first stage of retirement perceive their retirement income to be adequate. This study examined the effect of sociodemographic characteristic, human capital, financial capital, and financial attitude predictors on the perceived adequacy of retirement income. Probit analysis showed retired (first stage of retirement) respondents who were married, white, headed by male, college educated, had sufficient net worth and income, were homeowners, in good health, had saved, took financial risks, had a longterm financial planning horizon, received or expected to receive an inheritance had a defined benefit pension plan, and/or owned a defined contribution plan were more likely to perceive their retirement income to be adequate than otherwise similar households.
Author : Jack VanDerhei
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book The Importance of Defined Benefit Plans for Retirement Income Adequacy written by Jack VanDerhei and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: According to EBRI estimates, the percentage of private-sector workers participating in an employment-based defined benefit plan decreased from 38 percent in 1979 to 15 percent in 2008. Although much of this decrease took place by 1997, there have been a number of recent developments that have made defined benefit sponsors in the private sector re-examine the costs and benefits of providing retirement benefits through the form of a tax-qualified defined benefit plan. However, these plans still cover millions of U.S. workers and have long been valued as an integral component of retirement income adequacy for their households. In this paper, EBRI's Retirement Security Projection Model (RSPM) is used to evaluate the importance of defined benefit plans for households, assuming they retire at age 65. The paper shows the tremendous importance of defined benefit plans in achieving retirement income adequacy for Baby Boomers and Gen Xers. Overall, the presence of a defined benefit accrual at age 65 reduces the “at-risk” percentage by 11.6 percentage points. The defined benefit plan advantage (as measured by the gap between the two at-risk percentages) is particularly valuable for the lowest-income quartile but also has a strong impact on the middle class (the reduction in the at-risk percentage for the second and third income quartiles combined is 9.7 percentage points). The analysis also provides additional information on how the relative value of the defined benefit accruals impact retirement income adequacy. It should be noted that this analysis does NOT attempt to do a comparison between the relative effectiveness of defined benefit vs. defined contribution plans in providing retirement income adequacy; however, it does show that when the value of a defined benefit plan is analyzed for those without any future eligibility in a defined contribution plan, the impact on the at-risk ratings increases to 23.6 percentage points. In other words, for those households without future years of defined contribution eligibility, the presence of a defined benefit accrual at age 65 is sufficient to save nearly 1 out of 4 of these households in the Baby Boom and Gen X cohorts from becoming “at risk” of running short of money in retirement for basic expenses and uninsured medical expenses. The PDF for the above title, published in the August 2011 issue of EBRI Notes, also contains the fulltext of another August 2011 EBRI Notes article abstracted on SSRN: “The Impact of Repealing PPACA on Savings Needed for Health Expenses for Persons Eligible for Medicare.”
Author : Jack VanDerhei
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Retirement Income Adequacy for Boomers and Gen Xers written by Jack VanDerhei and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Measuring retirement security -- or retirement income adequacy -- is an extremely important topic. EBRI launched a major project to provide this type of measurement in the late 1990s for several states concerned whether their residents would have sufficient income when they reached retirement age. After conducting studies for Oregon, Kansas, and Massachusetts, a national model -- the EBRI Retirement Security Projection Model® (RSPM) -- was developed in 2003, and in 2010 it was updated to incorporate several significant changes, including the impacts of defined benefit plan freezes, automatic enrollment provisions for 401(k) plans, and the recent crises in the financial and housing markets. EBRI has recently updated RSPM for changes in financial and real estate market conditions as well as underlying demographic changes and changes in 401(k) participant behavior since January 1, 2010 (based on a database of 23 million 401(k) participants). This paper provides updates for the previously published EBRI Retirement Readiness RatingsTM as well as the Retirement Savings Shortfalls. EBRI's updated 2012 Retirement Security Projection Model® finds that for Early Baby Boomers (individuals born between 1948-1954), Late Baby Boomers (born between 1955-1964) and Generation Xers (born between 1965-1974), roughly 44 percent of the simulated lifepaths were projected to lack adequate retirement income for basic retirement expenses plus uninsured health care costs. These “at-risk” levels are some 5-8 percentage points LOWER than what was found in 2003, largely due to the growing adoption of automatic enrollment by 401(k) plan sponsors. Eligibility for a workplace defined contribution retirement plan has a significant positive impact on “at-risk” levels. The aggregate retirement income deficit number, taking into account current Social Security retirement benefits and the assumption that net housing equity is utilized “as needed,” is currently estimated to be $4.3 trillion for all Baby Boomers and Gen Xers. The PDF for the above title, published in the May 2012 issue of EBRI Notes, also contains the fulltext of another May 2012 EBRI Notes article abstracted on SSRN: “Trends in Employment-Based Coverage Among Workers, and Access to Coverage Among Uninsured Workers, 1995-2011.”
Author : Jack VanDerhei
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Retirement Readiness Ratings and Retirement Savings Shortfalls for Gen Xers written by Jack VanDerhei and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Measuring retirement security -- or retirement income adequacy -- is an extremely important topic. The May 2012 EBRI Notes article provided updates for the previously published EBRI Retirement Readiness RatingsTM as well as the average Retirement Savings Shortfalls (RSS). This paper provides sensitivity analysis on the Retirement Readiness RatingsTM by giving additional information on the percentage of the at-risk population that is relatively close to having adequate financial resources for retirement income adequacy. It also provides more detailed analysis on the distribution of the RSS. Unlike previous analyses, this paper focuses on the Gen Xer cohort (born between 1965-1974) in an attempt to assess the impact that eligibility for participation in a 401(k) plan has on these values. The dollar value of retirement savings shortfalls for Gen Xers varies considerably with the number of future years of eligibility for 401(k) plans, particularly for those in the highest severity category (simulated to have a shortfall of $200,000 or more): 13 percent of those with no future years of 401(k) eligibility have shortfalls in this range vs. only 3 percent for those with 20 or more years. Future eligibility for 401(k) plans makes a significant difference in reducing the percentage of households with shortfalls of $200,000 or more for all gender/family status combinations, but single females experience the largest absolute reduction in the percentage of those with shortfalls in this range. This paper also provides a comparative analysis of the importance of nursing home and home health care costs on retirement income adequacy. Figures 1-6 in the paper are based on the EBRI Retirement Security Projection Model® (RSPM) which simulates 1,000 alternative retirement paths for each household to explicitly model investment, longevity, and stochastic health care risks (i.e., nursing home and home health care costs). Figure 7 modifies RSPM by completely eliminating the nursing home and home health care risks to illustrate the extent of the errors introduced in models that ignore these risks. The PDF for the above title, published in the June 2012 issue of EBRI Notes, also contains the fulltext of another June 2012 EBRI Notes article abstracted on SSRN: “Use of Health Care Services and Access Issues by Type of Health Plan: Findings from the EBRI/MGA Consumer Engagement in Health Care Survey.”
Author : Jack VanDerhei
Publisher :
ISBN 13 :
Total Pages : 23 pages
Book Rating : 4.:/5 (129 download)
Download or read book Impact of the COVID-19 Pandemic on Retirement Income Adequacy written by Jack VanDerhei and published by . This book was released on 2020 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt: The research in this paper explores the aggregate potential impact of the 2020 market crisis as well as assumptions with respect to future employee and employer behavior in response to the current situation and potential decreases in defined contribution eligibility arising from increased unemployment. The combined impact of all intermediate assumptions (including the investment losses already experienced in the first quarter of 2020) certainly appears to be manageable: The $3.68 trillion aggregate deficit for all U.S. households ages 35-64 as of January 1, 2020, only increased 4.5 percent or $166.21 billion. Even the combination of pessimistic assumptions in this analysis only increased the aggregate retirement deficits by 11.2 percent or $412.77 billion.Of course, the crisis could result in unexpectedly worse outcomes -- market losses could be even greater, plan terminations more common, etc. Further, this analysis is not meant to minimize the potential impact of the current situation on specific individuals who are most affected. A future EBRI Issue Brief will focus on the latter. Another paper will analyze the impact of the Coronavirus Aid, Relief, and Economic Security (CARES) Act on retirement income adequacy, factoring in the potential ability of affected workers to take much bigger loans and withdrawals than they could even during the 2007-2009 financial crisis.
Author : National Research Council
Publisher : National Academies Press
ISBN 13 : 0309261961
Total Pages : 230 pages
Book Rating : 4.3/5 (92 download)
Download or read book Aging and the Macroeconomy written by National Research Council and published by National Academies Press. This book was released on 2013-01-10 with total page 230 pages. Available in PDF, EPUB and Kindle. Book excerpt: The United States is in the midst of a major demographic shift. In the coming decades, people aged 65 and over will make up an increasingly large percentage of the population: The ratio of people aged 65+ to people aged 20-64 will rise by 80%. This shift is happening for two reasons: people are living longer, and many couples are choosing to have fewer children and to have those children somewhat later in life. The resulting demographic shift will present the nation with economic challenges, both to absorb the costs and to leverage the benefits of an aging population. Aging and the Macroeconomy: Long-Term Implications of an Older Population presents the fundamental factors driving the aging of the U.S. population, as well as its societal implications and likely long-term macroeconomic effects in a global context. The report finds that, while population aging does not pose an insurmountable challenge to the nation, it is imperative that sensible policies are implemented soon to allow companies and households to respond. It offers four practical approaches for preparing resources to support the future consumption of households and for adapting to the new economic landscape.
Author : Jack VanDerhei
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Measuring Retirement Income Adequacy, Part One written by Jack VanDerhei and published by . This book was released on 2004 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper is the first of a two-part series intended to sort through some of the issues and variations in determining whether the post-World War II baby boom generation is likely to achieve an "acceptable" standard of living in retirement. A recent study by Hewitt Associates shows that the typical 401(k) participant is well-positioned to replace 85-95 percent of preretirement income when current Social Security, existing profit-sharing, and defined benefit plans are taken into account. The study examined the projected preretirement income replacement levels across 62 large companies of the 960,000 employees who were actively participating in their 401(k) plans as of January 1, 2003. The overall average replacement ratio for the Hewitt analysis drops from 95 percent under the high medical coverage assumption to 83 percent under the medium assumption and 80 percent under the low medical coverage assumption. This is true for employees retiring at a "normal" retirement age of 65, and who are relying primarily on Medicare for their health care benefits. Employees retiring at an earlier age will experience an even larger financial setback.
Author :
Publisher :
ISBN 13 : 9789279516832
Total Pages : 380 pages
Book Rating : 4.5/5 (168 download)
Download or read book The 2015 Pension Adequacy Report written by and published by . This book was released on 2015 with total page 380 pages. Available in PDF, EPUB and Kindle. Book excerpt: This 2015 edition of the Pension Adequacy Report, published in two volumes, assesses the degree to which pensions manage to provide older people with adequate income and poverty protection. Having examined the role of pensions in current living standards, the report discusses the impact of recent pension reforms, analyses the future risks to adequate old-age incomes and makes suggestions as to how these risks might be addressed by Member States, notably by women and men postponing their retirement by working to higher ages and by saving more. The report also underlines the need for mechanisms to protect those unable to have sufficiently long careers and to save adequately. While the main report, published as volume I, is devoted to a comparative analysis of pension adequacy at EU-28 level, a detailed discussion of pension adequacy in each of the 28 Member States is given in volume II. This publication is available in electronic format in English only.
Author : Olivia Mitchell
Publisher : Oxford University Press
ISBN 13 : 0192637541
Total Pages : 256 pages
Book Rating : 4.1/5 (926 download)
Download or read book Remaking Retirement written by Olivia Mitchell and published by Oxford University Press. This book was released on 2020-10-24 with total page 256 pages. Available in PDF, EPUB and Kindle. Book excerpt: Around the world, people nearing and entering retirement are holding ever-greater levels of debt than in the past. This is not a benign situation, as many pre-retirees and retirees are stressed about their indebtedness. Moreover, this growth in debt among the older population may render retirees vulnerable to financial shocks, medical care bills, and changes in interest rates. Contributors to this volume explore key aspects of the rise in debt across older cohorts, drill down into the types of debt and reasons for debt incurred by the older population, and review policies to remedy some of the financial problems facing older persons, in the US and elsewhere. The authors explore which groups are most affected by debt and identify the factors producing this important increase in leverage at older ages. It is clear that the economic and market environment is influential when it comes to saving and debt. Access to easy borrowing, low interest rates, and the rising cost of education have had significant impacts on how much people borrow, and how much debt they carry at older ages. In this environment, the capacity to manage debt is ever more important as older workers lack the opportunity to recover from mistakes.
Author : Oecd
Publisher :
ISBN 13 : 9789264633452
Total Pages : 208 pages
Book Rating : 4.6/5 (334 download)
Download or read book OECD Pensions Outlook 2020 written by Oecd and published by . This book was released on 2020-12-07 with total page 208 pages. Available in PDF, EPUB and Kindle. Book excerpt: The 2020 edition of the OECD Pensions Outlook examines a series of policy options to help governments improve the sustainability and resilience of pension systems. It considers how to ensure that policy makers balance the trade-off between the short-term and long-term consequences of policy responses to COVID-19; how to determine and assess the adequacy of retirement income; how funded pension arrangements can support individuals in non-standard forms of work to save for retirement; how to select default investment strategies; how to address the potential negative consequences from frequent switching of investment strategies; and, how retirement income arrangements can share both the investment and longevity risks among different stakeholders in a sustainable manner. This edition also discusses how governments can communicate in a way that helps people choose their optimal investment strategies.
Author : OECD
Publisher : OECD Publishing
ISBN 13 : 9264680160
Total Pages : 210 pages
Book Rating : 4.2/5 (646 download)
Download or read book OECD Pensions Outlook 2020 written by OECD and published by OECD Publishing. This book was released on 2020-12-07 with total page 210 pages. Available in PDF, EPUB and Kindle. Book excerpt: The 2020 edition of the OECD Pensions Outlook examines a series of policy options to help governments improve the sustainability and resilience of pension systems.
Author : OECD
Publisher : OECD Publishing
ISBN 13 : 9264433074
Total Pages : 157 pages
Book Rating : 4.2/5 (644 download)
Download or read book Towards Improved Retirement Savings Outcomes for Women written by OECD and published by OECD Publishing. This book was released on 2021-03-10 with total page 157 pages. Available in PDF, EPUB and Kindle. Book excerpt: Labour market inequalities are well-known to be the main drivers of the gender pension gap. This publication focuses on helping governments find solutions for retirement savings arrangements that do not further exacerbate these inequalities.
