This paper addresses the retirement income planning problem from the perspective of the four main building blocks of retirement income: state pension, mortality credits, investment strategies, and drawdown schedules. We detail how these building blocks interact to form a retiree's overall retirement income portfolio, and what trade-offs and interactions must be considered. We find that while access to each building block increases the retiree's certainty equivalent consumption, the most substantial contributor to this increase is from utilization of the mortality credit building block (i.e., annuities).

The decision about when and how much to annuitize is an important element of the retirement planning of most individuals. Optimal annuitization strategies depend on the individual’s exposure to annuity risk, meaning the possibility of meeting unfavorable personal and market conditions at the time of the annuitization decision. This article studies optimal annuitization strategies within a life-cycle consumption and portfolio choice model, focusing on stochastic interest rates as an important source of annuity risk. Closing a gap in the existing literature, our numerical results across different model variants reveal several typical structural effects of interest rate risk on the annuitization decision, which may however vary depending on preference specifications and alternative investment opportunities: When allowing for gradual annuitization, annuity risk is temporally diversified by spreading annuity purchases over the whole pre-retirement period, with annuity market participation starting earlier in the life cycle and becoming more extensive with increasing interest rate risk. Ruling out this temporal diversification possibility, as embedded in many institutional settings, incurs significant welfare losses, which are increasing with higher interest rate risk, together with larger overall demand for annuitization.

We test the effectiveness of an online interactive pension dashboard in improving pension funds participants' ability to make adequate pension decisions in terms of pension preparation, knowledge, self-efficacy, expectations, and intention-to-act. In a randomized survey experiment, treated participants of two pension funds receive an encouragement to visit an online pension dashboard. Treated individuals have more pension knowledge and an increased self-efficacy in the pension domain, especially so for females. The dashboard does not have a significant impact on the pension preparation or the errors in forecasts of pension income nor does it impact the willingness to act if there is a need to do so.

We investigate whether a benchmark and non-constant risk aversion affect the probability density distribution of optimal wealth at retirement. We maximize the expected utility of the ratio of pension wealth at retirement to an inflation-indexed benchmark. Together with a threshold and a lower bound, we are able to generate closed-form solutions. We find that this non-constant risk aversion type of utility could shift the probability density distribution of optimal wealth more towards the benchmark, and that the probability of achieving a certain percentage of the desired benchmark could be increased. The probability density distribution generated under constant relative risk aversion (CRRA) risk preference is more widely spread along the benchmark.

Twenty years ago, the adjustment to monthly Social Security benefits for early or delayed claiming was, on average, roughly actuarially fair, although some subsets of individuals could gain from delay. Since then, delaying claiming has become much more attractive thanks to three factors: a more generous delayed retirement credit, improvements in mortality, and historically low real interest rates. In this article, I examine how these three factors influence optimal claiming behavior. I also discuss empirical patterns of claiming across individuals and over time, as well as explanations for these patterns. I argue that although many people appear to claim suboptimally early, this behavior may be changing as information spreads about the importance of the claiming decision. Finally, I discuss policy toward claiming and the impact that an increase in strategic claiming could have on Social Security's finances.

Multiple selves is a conventional assumption in behavioural welfare economics for modelling intrapersonal well-being. Yet an important question is which self has normative authority over others. In this paper, we advance an argument for what we call the ‘ontological approach’ to personal identity in behavioural welfare economics. According to this approach, ethical questions – such as which preference should be granted normative authority over another – can be informed by the ontological criterion of personal persistence, which aims at determining what it takes for an individual to persist from one time to another.

We study the impact of changing the existing terminology to describe the rules governing Social Security retirement benefits. We provided respondents from a nationally representative online panel with information pertinent to the decision of when to claim Social Security retirement benefits. The content of the information treatments was identical for all respondents, but some were randomly given an alternative set of terms to refer to the key claiming ages (the experimental treatment group), while others were given the current terms (the control group). Despite the minimal nature of the change, there were significant differences in outcomes. Those in the treatment group spent less time reading the information, but their understanding of the Social Security program improved more than the control group. In addition, the treatment delayed retirement claiming intentions by an average of about two and a half months and increased the recommended claiming age to vignette characters by a similar magnitude. The effects were particularly strong for those with low levels of financial literacy. The relative gains in knowledge persisted several months after the treatment.

This study documents the credit outcomes of older adults immediately before and after the onset of the COVID-19 pandemic in the United States. On average, older adults experienced larger reductions in total household debt relative to younger adults. However, there is significant heterogeneity, where older adults with higher incomes experienced the largest declines, and lower-income older adults experienced an increase in total debt. Overall, these data highlight important trends in the credit experiences of older adults that may affect their future financial security.

We study a parent's demand for gratitude from his child. We view this demand as an intervening variable between the parent's earnings and the incidence of child labor. The demand for gratitude arises from the desire of a parent to receive care and support from his child late in life, while the inclination of the child to provide this support during his adulthood is determined by how the child was treated by his parent during childhood. Specifically, we model the child's gratitude as an inverse function of the intensity of his labor in childhood. We show that when we keep the child's (imputed) wage constant, the intensity of child labor decreases with the parent's earnings. However, when we make the child's (imputed) wage a function of the parent's earnings, then the outcome can be different. With the help of a numerical example, we show that the pattern of child labor related to the parent's earnings can be U-shaped.

In 2015, the U.S. Treasury Department launched myRA, a no-fee retirement account designed for people who lacked employer-sponsored retirement options. We report findings from two behavioral field experiments intended to motivate interest in using the tax refund to open and fund myRAs directly through the tax-filing process. These experiments, administered to more than 100,000 low-income tax filers in 2016, embedded persuasive messages in emails sent to filers and directly within online tax-filing software. We find that interest in myRA was generally very low, although interest and enrollment intentions varied depending on the framing of the program's benefits.

Based on nationally representative data (N = 8,901), this study investigates the extent to which expectations for intra-family transfers and government assistance in old age impact the probability of saving for retirement among working-age individuals in Thailand. Results show that expectations for financial non-self-reliance and expectations that family support would constitute the most important source of old-age financial security reduce the probability that working-age individuals would save for retirement. Expectations for government support have no impact on average. Given that filial piety is weakening in Thailand, this study suggests that the government encourage pre-retirement savings more strongly.

The transition from defined benefit to defined contribution (DC) pension schemes has increased the interest in target annuitization funds that aim to fund a minimum level of retirement income. Prior literature has studied the optimal investment strategies for DC funds that provide minimum guarantees, but far less attention has been given to portfolio insurance strategies for DC pension funds focusing on retirement income targets. We evaluate the performance of option-based and constant proportion portfolio insurance strategies for a DC fund that targets a minimum level of inflation-protected annuity income at retirement. We show how the portfolio allocation to an equity fund varies depending on the member’s age upon joining the fund, displaying a downward trend through time for members joining the fund before ages in the mid-30s. We demonstrate how both portfolio insurance strategies provide strong protection against downside equity risk in financing a minimum level of retirement income. The option-based strategy generally leads to higher accumulated savings at retirement, whereas the constant proportion strategy provides better downside risk protection robust to equity market jumps/volatilities.

Using Health and Retirement Study data linked to summary plan descriptions and W-2s, this study reports trends in retirement wealth inequality of older employees 1992–2010. The study identifies and corrects methodological flaws in past research. Retirement wealth is highly unequally distributed; the top lifetime earnings quintile holds half of all retirement wealth, the bottom quintile, only 1%. The top earnings quintile fared better in 2010 than in 1992, whereas bottom-quintile earners fared worse. But retirement wealth inequality mainly reflects inequality within earnings quintiles, resulting from inadequate savings, not outsize accumulations. Systemic flaws reduce median retirement wealth by 84%

We set up an overlapping-generations model with endogenous fertility to study pensions policies in an ageing economy. We show that an increasing life expectancy may not be detrimental for the economy or the pension system itself. On the other hand, conventional policy measures, such as increasing the retirement age or changing the social security contribution rate could have undesired general equilibrium effects. In particular, both policies decrease capital per worker and might have negative effects on the fertility rate, thus exacerbating population ageing.

The Farnsworth D15 test (D15) was developed for use in occupational guidance. People with significant color deficiency, including all dichromats are expected to fail and people with slight color deficiency are expected to pass. Pass is a circular results diagram and fail an interlacing pattern with one or more red-green isochromatic errors (Farnsworth, 1947). The Nagel anomaloscope is a “gold standard” reference test for identifying and classifying red-green color deficiency. The matching range on the red/green mixture scale indicates the severity of the discrimination deficit. Pass/fail results for the D15 are presented for 107 protanomalous and 410 deuteranomalous trichromats and compared with the anomaloscope matching range. Thirty-six percent of the subjects examined failed the D15. Protanomalous trichromats are able to utilize perceived luminance contrast to obtain good results on the D15 but 42% of these subjects failed the D15 compared with 35% of deuteranomalous subjects. Failure of the D15 was clearly related to the Nagel matching range in deuteranomalous trichromatism but not in protanomalous trichromatism. For example, 84% of deuteranomalous subjects with matching ranges > 30 scale units failed the D15 but only 2% with matching ranges < 9 scale units were unsuccessful. In comparison, 53% of protanomalous subjects with matching ranges > 15 scale units and 33% of subjects with matching ranges < 5 scale units were unsuccessful. Protanomalous trichromats with apparently minimal color deficiency are therefore shown to have poor practical hue discrimination ability as measured with this test.