Abstract:

We consider the causes of international capital flows. Since capital flows are extremely persistent, we argue that their drivers must be persistent, too. We think the most compelling candidates are demographic trends, tfp differences and financial frictions. In this paper we focus primarily on the role of demography in a multi-country overlapping generations model in which saving decisions are tied to agents’ life expectancy. Capital flows reflect differences between saving and investment across countries. Demographic changes affect the aggregate accumulation of assets in two ways: by changing life expectancy which changes individual household saving behavior, and by changing the age distribution of the population by which individual household decisions are aggregated. The most important drivers turn out to be increases in life expectancy caused by decreases in adult mortality.We use a quantitative version of the model to illustrate the impact of demography on capital flows and net foreign assets in China, Germany, Japan, and the United States.

www.nber.org/papers/w19465

www.ceps.eu/book/saving-retirement-and-investing-growth

www.brookings.edu/events/2013/09/17-retirement-savings-programs-lessons

www.irs.gov/pub/irs-soi/13insumbulw2.pdf

www.ebri.org/publications/notes/index.cfm?fa=notesDisp&content_id=5254

B. “The Impact of a Retirement Savings Account Cap,” by Jack VanDerhei (Issue Brief No. 389, August 2013, .pdf format, 28p.).

www.ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=5252

Abstract:

Many organizations provide retirement planning seminars to their employees as a benefit to help them make better informed retirement decisions. This study examines the participants in 85 seminars conducted by five companies in 2008 and 2009 to determine how much learning takes place and whether employees adjust retirement plans. Using surveys conducted before and after the seminars, we find that financial literacy and knowledge of retirement program parameters are significantly higher after the seminar. Employees with the largest increases in knowledge were most likely to change their planned retirement age and planned age of claiming Social Security benefits.

www.nber.org/papers/w19231

www.ebri.org/publications/notes/index.cfm?fa=notesDisp&content_id=5240

www.help.senate.gov/hearings/hearing/?id=a821d5cc-5056-a032-5262-bef6f7aec87f

www.nirsonline.org/index.php?option=content&task=view&id=768

More information about NIRS:

www.nirsonline.org/index.php?option=com_content&task=view&id=30&Itemid=66

www.statcan.gc.ca/pub/11-622-m/11-622-m2013029-eng.htm

www.bls.gov/opub/mlr/2013/05/art1exc.htm

Abstract:

An enhanced version of a structural model jointly explains benefit claiming, wealth and retirement, including reversals from states of lesser to greater work. The model includes stochastic returns on assets. Estimated with Health and Retirement Study data, it does a better job of predicting claiming than previous versions. Alternative beliefs about the future of Social Security affect predicted outcomes. Effects of three potential policies are also examined: increasing the early entitlement age, increasing the full retirement age, and eliminating the payroll tax for seniors. Predicted responses to increasing the full entitlement age are sensitive to beliefs.

www.nber.org/papers/w19071

B. “The Spillover Effects of Medicare Managed Care: Medicare Advantage and Hospital Utilization,” by Katherine Baicker, Michael Chernew, and Jacob Robbins (w19070, May 2013, .pdf format, 39p.).

Abstract:

More than a quarter of Medicare beneficiaries are enrolled in Medicare Advantage, which was created in large part to improve the efficiency of health care delivery by promoting competition among private managed care plans. This paper explores the spillover effects of the Medicare Advantage program on the traditional Medicare program and other patients, taking advantage of changes in Medicare Advantage payment policy to isolate exogenous increases in Medicare Advantage enrollment and trace out the effects of greater managed care penetration on hospital utilization and spending throughout the health care system. We find that when more seniors enroll in Medicare managed care, hospital costs decline for all seniors and for commercially insured younger populations. Greater managed care penetration is not associated with fewer hospitalizations, but is associated with lower costs and shorter stays per hospitalization. These spillovers are substantial – offsetting more than 10% of increased payments to Medicare Advantage plans.

www.nber.org/papers/w19070

C. “Framing Lifetime Income,” by Jeffrey R. Brown, Jeffrey R. Kling, Sendhil Mullainathan, and Marian V. Wrobel (w19063, May 2013, .pdf format, 22p.).

Abstract:

We provide evidence that individuals optimize imperfectly when making annuity decisions, and this result is not driven by loss aversion. Life annuities are more attractive when presented in a consumption frame than in an investment frame. Highlighting the purchase price in the consumption frame does not alter this result. The level of habitual spending has little interaction with preferences for annuities in the consumption frame. In an investment frame, consumers prefer annuities with principal guarantees; this result is similar for guarantee amounts below, at, and above the purchase price. We discuss implications for the retirement services industry and its regulators.

www.nber.org/papers/w19063

www.pensionresearchcouncil.org/publications/document.php?file=1055

www.federalreserve.gov/pubs/feds/2013/201323/201323abs.html

www.pbs.org/wgbh/pages/frontline/retirement-gamble/

crr.bc.edu/briefs/do-income-projections-affect-retirement-saving/

www.ebri.org/publications/notes/index.cfm?fa=notesDisp&content_id=5180

crr.bc.edu/briefs/subsidies-vs-nudges-which-policies-increase-saving-the-most/

www.ebri.org/publications/notes/index.cfm?fa=notesDisp&content_id=5157

web.hks.harvard.edu/publications/workingpapers/citation.aspx?PubId=8742

Abstract:

This paper explores the relationship between education and the evolution of wealth after retirement. Asset growth following retirement depends in part on health capital and financial capital accumulated prior to retirement, which in turn are strongly related to educational attainment. These ‘initial conditions’ for retirement can have a lingering effect on subsequent asset evolution. Our aim is to disentangle the effects of education on post-retirement asset evolution that operate through health and financial capital accumulated prior to retirement from the effects of education that impinge directly on asset evolution after retirement. We consider the indirect effect of education through financial resources-in particular Social Security benefits and defined benefit pension benefits-and through health capital that was accumulated before retirement. We also consider the direct effect of education on asset growth following retirement, emphasizing the correlation between education and the returns households earn on their post-retirement investments. Households with different levels of education invest, on average, in different assets, and they may consequently earn different rates of return. Finally, we consider the additional effects of education that are not captured through these pathways. Our empirical findings suggest a substantial association between education and the evolution of assets. For example, for two person households the growth of assets between 1998 and 2008 is on average much greater for college graduates than for those with less than a high school degree. This difference ranges from about $82,000 in the lowest asset quintile to over $600,000 in the highest.

papers.nber.org/papers/w18695

crr.bc.edu/working-papers/sticky-ages-why-is-age-65-still-a-retirement-peak/

B. “Accumulation and Decumulation Strategies in the Wake of the Financial Crisis,” by Richard W. Kopcke, Anthony Webb, and Josh Hurwitz (WP No. 2013-1, January 2013, .pdf format, 19p.). Note: Links to the abstract and full-text can be found at:

crr.bc.edu/working-papers/rethinking-optimal-wealth-accumulation-and-decumulation-strategies-in-the-wake-of-the-financial-crisis/

C. “Employee Mobility and Employer-Provided Retirement Plans,” by Gopi Shah Goda, Damon Jones and Colleen Flaherty Manchester (WP No. 2012-28, November 2012, .pdf format, 47p.). Note: Links to the abstract and full-text can be found at:

crr.bc.edu/working-papers/employee-mobility-and-employer-provided-retirement-plans/

crr.bc.edu/briefs/a-nudge-isn%e2%80%99t-always-enough/

Abstract:

Do retirement savings policies – such as tax subsidies or employer-provided pension plans – increase total saving for retirement or simply induce shifting across accounts? We revisit this classic question using 45 million observations on savings for the population of Denmark. We find that a policy’s impact on total savings depends critically on whether it changes savings rates by active or passive choice. Tax subsidies, which rely upon individuals to take an action to raise savings, have small impacts on total wealth. We estimate that each $1 of tax expenditure on subsidies increases total saving by 1 cent. In contrast, policies that raise savings automatically even if individuals take no action – such as employer-provided pensions or automatic contributions to retirement accounts – increase wealth accumulation substantially. Price subsidies only affect the behavior of active savers who respond to incentives, whereas automatic contributions increase savings of passive individuals who do not reoptimize. We estimate that 85% of individuals are passive savers. The 15% of active savers who respond to price subsidies do so primarily by shifting assets across accounts rather than reducing consumption. These individuals also o set changes in automatic contributions and have higher wealth-income ratios. We conclude that automatic contributions are more effective at increasing total retirement savings than price subsidies for three reasons: (1) subsidies induce relatively few individuals to respond, (2) they generate substantial crowdout conditional on response, and (3) they do not influence the savings behavior of passive individuals, who are least prepared for retirement.

www.nber.org/papers/w18565

B. “What Makes Annuitization More Appealing?” by John Beshears, James J. Choi, David Laibson, Brigitte C. Madrian, and Stephen P. Zeldes (w18575, November 2012, .pdf format, 25p.).

Abstract:

We conduct and analyze two large surveys of hypothetical annuitization choices. We find that allowing individuals to annuitize a fraction of their wealth increases annuitization relative to a situation where annuitization is an ‘all or nothing’ decision. Very few respondents choose declining real payout streams over flat or increasing real payout streams of equivalent expected present value. Highlighting the effects of inflation increases demand for cost of living adjustments. Frames that focus on flexibility, control, and investment risk significantly reduce annuitization. A majority of respondents prefer to receive an extra ‘bonus’ payment during one month of the year that is funded by slightly lower payments in the remaining months. Concerns about later-life income, spending flexibility, and counterparty risk are the most important self-reported motives that influence the annuitization decision, whereas the desire to leave a bequest has little influence on this decision.

www.nber.org/papers/w18575

www.aarp.org/health/medicare-insurance/info-11-2012/open-enrollment-2013-medicare-AARP-ppi-health.html

B. “New Ways to Promote Retirement Saving,” by William G. Gale, David C. John, and Spencer Smith (November 2012, .pdf format, 50p.).

www.aarp.org/work/retirement-planning/info-11-2012/new-ways-to-promote-retirement-saving-AARP-ppi-econ-sec.html

C. “Winter Heating Costs Report,” by Ann McLarty Jackson and Neal Walters (November 2012, .pdf format, 7p.).

www.aarp.org/money/low-income-assistance/info-10-2012/Winter-Heating-Costs-Report-October-2012-AARP-ppi-cons-prot.html

D. “The Employment Situation, October 2012,” by Sara E. Rix (November 2012, .pdf format, 8p.).

www.aarp.org/work/job-hunting/info-11-2012/the-employment-situation-october-2012-AARP-ppi-econ-sec.html

www.ilcuk.org.uk/index.php/publications/publication_details/boosting_retirement_saving_across_europe

A. “Ambiguity Attitudes and Economic Behavior: Evidence from a U.S. Household Survey,” by Stephen G. Dimmock, Roy Kouwenberg, Olivia S. Mitchell, and Kim Peijnenburg (WP2012-20, September 2012, .pdf format, 54p.). Note: Links to the abstract and full-text can be found at:

www.pensionresearchcouncil.org/publications/document.php?file=1037

B. “Exchanging Delayed Social Security Benefits for Lump Sums: Could This Incentivize Longer Work Careers?” by Jingjing Chai, Raimond Maurer, Olivia S. Mitchell, and Ralph Rogalla (WP2012-21, October 2012, .pdf format, 29p.). Note: Links to the abstract and full-text can be found at:

www.pensionresearchcouncil.org/publications/document.php?file=1036

A. “How to Make the Market for Financial Advice Work,” by Andreas Hackethal and Roman Inderst (WP2012-14, September 2012, .pdf format, 23p.). Note: Links to the abstract and full-text can be found at:

www.pensionresearchcouncil.org/publications/document.php?file=1030

B. “Regulating Financial Planners: Assessing the Current System and Some Alternatives,” by Jason Bromberg and Alicia P. Cackley (WP2012-18, September 2012, .pdf format, 23p.). Note: Links to the abstract and full-text can be found at:

www.pensionresearchcouncil.org/publications/document.php?file=1033

C. “Evaluating the Impact of Financial Planners,” by Cathleen D. Zick and Robert N. Mayer (WP2012-12, September 2012, .pdf format, 42p.). Note: Links to the abstract and full-text can be found at:

www.pensionresearchcouncil.org/publications/document.php?file=1028

D. “Financial Advice: Does it Make a Difference?” by Michael Finke (WP2012-15, September 2012, .pdf format, 32p.). Note: Links to the abstract and full-text can be found at:

www.pensionresearchcouncil.org/publications/document.php?file=1031

E. “When, Why, and How Do Mutual Fund Investors Use Financial Advisors?” by Sarah A. Holden (WP2012-16, September 2012, .pdf format, 34p.). Note: Links to the abstract and full-text can be found at:

www.pensionresearchcouncil.org/publications/document.php?file=1032

www.minneapolisfed.org/publications_papers/pub_display.cfm?id=4943

www.oecd-ilibrary.org/finance-and-investment/financial-education-savings-and-investments_5k94gxrw760v-en

crr.bc.edu/working-papers/how-would-gasb-proposals-affect-state-and-local-pension-reporting-2/

B. “Borrow Less Tomorrow: Behavioral Approaches to Debt Reduction,” by Dean Karlan and Jonathan Zinman (FSP 2012-1, May 2012, .pdf format, 37p.). Note: Links to the abstract and full-text can be found at:

crr.bc.edu/working-papers/borrow-less-tomorrow-behavioral-approaches-to-debt-reduction/

www.urban.org/publications/412510.html