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Full-Text Articles in Social and Behavioral Sciences
The Adequacy Of Economic Resources In Retirement, Michael Hurd, Susann Rohwedder
The Adequacy Of Economic Resources In Retirement, Michael Hurd, Susann Rohwedder
Susann Rohwedder
The most common metric for assessing the adequacy of economic preparation for retirement is the income replacement rate, the ratio of income after retirement to income before retirement. However both economic theory and common sense say that someone is adequately prepared if she is able to maintain her level of economic well-being, which is not the same as maintaining her level of income or some fixed proportion of income. Economic well-being is typically measured by consumption, which is the measure we use. We define and estimate measures of economic preparation for retirement based on a complete inventory of economic resources, …
Individuals’ Responses To Social Security Reform, Adeline Delavande, Susann Rohwedder
Individuals’ Responses To Social Security Reform, Adeline Delavande, Susann Rohwedder
Susann Rohwedder
The Social Security trust fund is predicted to be depleted by 2041. While there are several viable reform proposals to restore long-term solvency of the Social Security system, one important element that is critical to the success of any reform remains unknown: how will individuals respond to, for example, a cut of their Social Security benefits. Will they work longer or save more or both, and to what extent will their response make up for the cut in benefits? In this paper we use data from the HRS Internet Survey where we asked respondents directly what they would do if …
The Retirement-Consumption Puzzle: Actual Spending Change In Panel Data, Michael Hurd, Susann Rohwedder
The Retirement-Consumption Puzzle: Actual Spending Change In Panel Data, Michael Hurd, Susann Rohwedder
Susann Rohwedder
The simple one-good model of life-cycle consumption requires that consumption be continuous over retirement; yet prior research based on partial measures of consumption or on synthetic panels indicates that spending drops at retirement, a result that has been called the retirement-consumption puzzle. Using panel data on total spending, nondurable spending and food spending, we find that spending declines at small rates over retirement, at rates that could be explained by mechanisms such as the cessation of work-related expenses, unexpected retirement due to a health shock or by the substitution of time for spending. In the low-wealth population where spending did …