SOCIAL SECURITY AND RETIREMENT DECISIONS

One of the most striking features of the postwar U.S. economy has been the rapid decrease in the labor force participation of the elderly at a time when the health of this group has been improving. In spite of this, previous research, based on retrospective interviews with the retired population, usually concludes that poor health accounts for the overwhelming majority of retirements. This paper suggests that nothing could be further from the truth. Using data from the Panel Study of Income Dynamics, we follow a cohort of white married males through their sixties to estimate a model of retirement behavior. Using several definitions of retirement suggested in the literature, we find that the two key policy parameters of the social security system—the income guarantee and the implicit tax on earnings—exert an enormous influence on retirement decisions. For example, our results suggest that a decrease in the implicit tax rate on earnings from one-half to one-third would reduce the annual probability of retirement by about fifty percent! Applying the coefficient estimates to time series data on the labor force participation of the elderly implies that the social security system has been the major factor in the explosion in earlier retirement.     

Retirement Intentions of Same-Sex Couples

Summary

Retirement intentions of same-sex and opposite-sex couples were investigated. Data were drawn from the Cornell Couples and Careers Study. The sample consists of 32 women in same-sex relationships, 7 men in same-sex relationships, 30 men and women in cohabiting relationships, and 30 married men and women. Participants' responses to such questions as age expected to retire, age they began retirement planning, degree of financial planning for retirement, degree of preparation for housing and healthcare, and plans for post-retirement work and volunteering were analyzed. Female same-sex couples self-rate on financial planning for retirement to a significantly lower degree than married couples. The implications for post-retirement well-being and the need for financial planning are discussed.     

Individual Wealth and Subjective Financial Well‐being in Marriage: Resource Integration or Separation?

Economic wealth is mostly assumed to be a household‐level resource that is pooled by spouses in married couples. Using comprehensive data on the individual wealth of both spouses in married couples from the German Socio‐Economic Panel Study (N = 13,623 individuals), the author tests this assumption. To this end, the associations between individuals' wealth and their spouses' wealth with individuals' subjective financial well‐being are examined. Results show that women's financial well‐being is equally associated with their own individual wealth and their spouses' wealth in older birth cohorts. In younger birth cohorts, women's financial well‐being is more strongly associated with their own individual wealth than with their spouses' wealth. For men from all birth cohorts, their own individual wealth is more strongly related to their financial well‐being than is their spouses' wealth. These findings suggest that wealth is not generally and fully pooled and that individual ownership matters within married couples in Germany.     

Retirement and marital decision making: Effects on retirement satisfaction

This study explores how partner's employment and preretirement decision‐making structures affect retirement satisfaction, using pooled data from Waves 1 to 4 of the Health and Retirement Surveys. Based on resource theory, the analyses indicate that retired husbands are least satisfied if their wives remain employed and had more say in decisions prior to the husband's retirement. Retired wives are least satisfied if their husbands remain employed and had more say in decisions prior to the wife's retirement. These results suggest that retirement transitions undermine married retirees’ satisfaction if they enhance the other partner's influence in the relationship. More research should address linkages between work and family realms during transitions such as retirement and explore the negotiation processes surrounding such transitions.     

Gender,Productivity, and the Marital Wage Premium

Explanations for married men’s wage premium often emphasize greater market productivity due to a gendered division of household labor, though this “specialization thesis” has been insufficiently interrogated. Using data from Wave 2 of the National Survey of Families and Households (N = 972), this paper examines the relationship between wages and time spent in paid labor and housework for married women and men with high levels of labor force attachment and their spouses. Scrutiny of couples’ time use finds strong evidence for the gendered division of labor, but little support for the anticipated wage effects of the specialization thesis itself. Less strict sample restrictions point to the need for continued research directed at couples’ joint employment and household labor decisions.     

Sexual orientation and household financial decisions: evidence from couples in the United States

We analyze how sexual orientation is related to household financial decisions using 2000 US Census data, and find that lesbian couples pay higher annual mortgages relative to house value than do heterosexual or gay couples. We also estimate that cohabiting heterosexuals pay more than their married counterparts. We link this homosexual-specific differential to homeowners’ propensity to save. This differential reflects the gender composition of same-sex households, and their very low fertility, in addition to the precautionary motives increasing cohabiting couples’ propensity to save relative to married ones. Evidence from retirement and social security income of older couples exhibits the same pattern of differentials by sexual orientation and cohabiting status.     

Labor Market Search and Optimal Retirement Policy

A popular and long‐standing view is that social security is a means for young, unemployed people to “purchase” jobs from older workers. Can social security, by encouraging retirement and hence creating job vacancies for the young, improve the allocation of workers to jobs? Maybe, according to a standard model of labor market search, but public retirement programs currently pay the elderly substantially more than their jobs are worth. An important effect is that retirement reduces the value of other vacant jobs. Our results imply that recent reforms aimed at reducing retirement incentives are likely to improve labor market efficiency.     

Labor force exit decisions of new mothers

Using unique administrative data from the state of Georgia, this paper investigates women’s decisions to exit the labor market upon the birth of a child. Exits rates and their changes over time varies dramatically between married and single women giving birth. Only the pattern among single, less educated women can be considered consistent with changing labor force participation rates of women over the period of analysis. Potential policy implications of these changes are discussed.     

AN ANALYSIS OF WOMEN'S RETURN-TO-WORK DECISIONS FOLLOWING FIRST BIRTH

Women's labor force participation has increased sharply over the last two decades, particularly for married women with young children. This suggests women are spending less time out of the labor force for child bearing and rearing. Using the detailed information available in the NLSY, I explore women s decisions to return to work within one year of their first child's birth, focusing on the effect of child care costs. Consistent with economic theory, women facing lower child care costs are more likely to return to work as are women with higher potential wages and lower family income from other sources . ( JEL J0)     

Re-examining female labor supply responses to the 1994 Australian pension reform

Many governments are aiming to extend working lives by raising the age at which people can claim retirement pensions. This makes it vital to understand how these policies affect retirement decisions. In this paper, I revisit the labor supply effects of a major Australian reform that increased women’s pension age from 60 to 65. Atalay and Barrett (2015) studied these effects using repeated household surveys and a differences-in-differences design in which male cohorts form the comparison group. They estimate that the reform increased female labor force participation by 12 percentage points. Using earlier data, I show that the parallel-trends assumption did not hold before the reform because of a strong female-specific trend in participation rates across the relevant cohorts. Accounting for this trend, the estimated effect on female participation falls by two-thirds and becomes statistically insignificant at conventional levels. This highlights the importance of carefully assessing and controlling for trends across cohorts when evaluating pension reforms, which are typically phased in across cohorts.

     

Spending Today or Saving for Tomorrow: The Influence of Family Financial Socialization on Financial Preparation for Retirement

Many of the factors that motivate individuals occur within the context of the family, and can be influenced through family socialization processes. To better understand the influence family socialization processes may have on financial capabilities and financial behaviors, 334 married couples were sampled. Structural equation modeling was used to examine both direct and indirect associations. Findings indicated direct relationships between materialism and financial strain, between religiosity and determination of needs, and between financial strain and saving for retirement. Indirect relationships were found between materialism and saving for retirement through financial strain. Our study found evidence to support the Family Financial Socialization theoretical framework. Financial counselors may benefit by understanding how couples socialize each other as they prepare for retirement.     

Quality of marriage: a comparison between golden wedding couples and couples married less than fifty years

The quality of marriage is investigated for a sample of 79 couples living in a midwestern comprehensive retirement community. These 158 older, middle-class men and women are healthy and average 74.8 years of age. Marital length averages 41 years, and 34.8 percent have celebrated their fiftieth wedding anniversary. Marital quality, morale, and sexual behavior are not significantly different for golden wedding couples than for couples married less than 50 years. Couples married less than 50 years spend more time socializing with other couples each week than do those who have passed the 50 year mark; they also have higher levels of sexual interest, and are more likely to have been previously married. All of these couples are happily married, have high morale, and most are still sexually active (62.8 percent).     

Five factors in long-term marriages

The marriage relationship among 210 retired married couples was investigated as a function of sex, retirement status, relationship to children, commitment of the couple, and stage of ego development of the couple. The marriage relationship was assessed by measuring the expression of love between husbands and wives, and measuring their marriage problems. These older couples expressed less love to each other and had fewer marriage problems than younger married couples. Those couples who were committed to each other as persons, had fewer marriage problems. Those at more complex levels of ego development expressed more love to each other. Sex, retirement, and interaction with children were not related to the marriage relationship.This research was supported in part by NIMH Grant No. RO1 MH26933.     

Retirement and risk: the individualisation of retirement experiences?

A climate of uncertainty and risk exists in the field of retirement and pensions. Many employers have modified their pension schemes shifting the financial risk onto employees. Many individuals with private pensions have watched the value of their savings diminish. Added to this, the trend toward early retirement before state pension age has destabilised the traditional life course notion of a fixed retirement age, (especially for men). As a result, the concept of retirement itself has become more unpredictable and difficult to define. In this article we examine the extent of the individualisation of retirement experiences by reference to a study of retirement transitions in two organisations. The research investigated the influences on people's retirement decisions and the extent to which they experienced choice and control over how and when they retired. It is possible to identify a pattern of individualisation in contrast to its opposite of a mass transition into retirement, collectively understood and embedded in formal, institutionalised arrangements. However, underlying this fragmentation of experience there are clear structural patterns. The form that structured individualisation took here, was less to increase the majority of people's range of alternatives and choices over when and how to retire and more to enlarge the range of risks they had to cope with.     

Women's work, cohort change, and health

Rapid changes in women's labor force participation, access to good jobs, and changing work-family pressures have altered the landscape of work and family life. We use logit negative binomial hurdle models to examine whether these countervailing trends have affected the physical health of women across four birth cohorts. Longitudinal data are used to compare successive cohorts of U.S. women when they are between the ages 44 and 50. While the health of women overall did not change across cohorts, we find an increase in health problems among employed women, explained by increases in the ability of women with physical limitations to become and remain employed. Health problems among housewives decline across cohorts, resulting in better health among housewives than among employed women in the most recent cohort. These findings provide further evidence of the importance of selection processes in understanding health effects of roles, and they highlight the need for greater attention to the health effects of unpaid work.     

How do sex ratios in China influence marriage decisions and intra-household resource allocation?

This article examines how imbalanced sex ratios influence marriage decisions and household bargaining. Using data from the 1982 Chinese census, the traditional “availability ratio” is modified to reflect the degree to which men tend to marry women from different cohorts. This ratio reflects the average tendency of men to prefer women who are close in age to women who are several years younger than them by weighting cohort sizes using the proportion of people in the population who marry someone born in a different cohort. Given that men generally marry younger women, this ratio varies independently of the size of one’s own birth cohort. Yet, the ratio fluctuates considerably across individuals, as the sizes of birth cohorts in China vary across time and regions. This enables us to examine how variability in such ratios may influence marriage decisions and household bargaining. The findings suggest that women exercise greater bargaining power once married. Results indicate that as women become scarcer in the marriage market, they have healthier sons. Men also delay marriage, and consume less tobacco and alcohol. This paper also highlights how sensitive findings may be to using this modified weighted availability ratio rather than a traditional unweighted availability ratio.     

Predicting End‐of‐Career Transitions for Baby Boomers Nearing Retirement Age

Retirement has traditionally been conceptualized as a point‐in‐time decision to physically and psychologically withdraw from the workforce on reaching a certain age. However, the expectations of older workers demonstrate a new retirement paradigm, with many more retirement trajectories. The purpose of this study was to examine actual career decisions being made by older workers and to understand sociodemographic factors that might differentiate their career trajectories. Data from the Health and Retirement Study (Juster & Suzman, 1995 ) were analyzed using multinomial logistic regression to compare 4 retirement trajectories (i.e., no retirement, full retirement, bridge employment, and encore career). Gender, age, education, marital status, health, and wealth differentially predicted the odds of pursuing each of the 4 retirement decisions. Career practitioners may use these results to help baby boomers make retirement decisions and provide them with appropriate education, guidance, and resources. Additional research is needed to examine other factors salient to each of the retirement trajectories.     

GENDER-BASED RISK AVERSION AND RETIREMENT ASSET ALLOCATION

This research examines whether women have higher risk aversion than men as demonstrated by their retirement asset allocation. The analysis is extended to investigate how retirement asset investment decisions are made in married households. Initial results suggest controlling for demographic, income, and wealth differences lead to no significant difference in the proportion of retirement assets held in stocks between women and male faculty. For married households with joint investment decision making, results indicate that gender differences are a significant factor in explaining individual retirement asset allocation. Our estimates imply that women faculty are more risk averse than their male spouse. ( JEL J16, G11, D10)     

Women and Economic Security in Retirement:Implications for Social Security Reform

Gender-related parenting roles lower incomes of women during the working-age years and in retirement years. National retirement income programs contribute to this gender-related difference in retirement income to the degree that they consider lifetime earnings in calculating benefits. This article examines two national pension systems: those of Australia and Sweden. The pension systems of these two countries often are considered as the extremes of pension generosity, and they are based upon different philosophies about the role of government in insuring against economic risk. Due to fiscal issues and the changing roles of women in the labor market, both have reformed their systems. How system reforms can balance the role of the government in insuring against income risk and the growing financial independence of women in the work force are discussed.     

Return Chasing as a Driver in Individual Retirement Savings Investment Choices: Evidence from Australia

Australia’s retirement savings regime requires employers to make contributions to a superannuation fund for their employees. Workers who may have no experience of investment are asked to make relatively complex decisions, which have significant implications for their retirement lifestyle. Evidence suggests individuals may be unduly influenced by recent historical returns when making investment choices. Such a bias may produce sub-optimal results over the longer-term. This paper uses a large database from four not-for-profit retirement savings funds to investigate members’ investment choices using logistic regression and multi-variate tests. We find evidence that choices are driven by recent historical returns. We also investigate demographics and find a link between age and return chasing behaviour.