Retirement, Saving, Benefit Claiming and Solvency Under a Partial System of Voluntary Personal Accounts

30 Pages Posted: 17 Feb 2008

See all articles by Alan L. Gustman

Alan L. Gustman

Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)

Thomas L. Steinmeier

Texas Tech University - Department of Economics and Geography

Date Written: October 2005

Abstract

This paper is based on a structural model of retirement and saving, estimated with data for a sample of married men in the Health and Retirement Study. The model simulates how various features of a system of personal Social Security accounts jointly affects retirement, saving, the choice of whether benefits are taken as an annuity or lump sum, taxes paid and the course of benefits with age. Among our findings: Under a system of partial personal accounts, the fraction of 62 year olds at full time work would decline by about 22 percent compared to retirements under the current benefit formula. If the current system were replaced completely by personal accounts, the fraction at full time work would decline by about a third. If all benefits from personal accounts could be taken as a lump sum, the fraction not retired at age 62 would fall by about 5 percentage points compared to a system where there is mandatory annuitization of benefits. Unless annuitization is mandatory, there would be substantial diversion of benefits to age 62, reducing benefits received in one's 70s and 80s by 20 percent or more.

Suggested Citation

Gustman, Alan L. and Steinmeier, Thomas L., Retirement, Saving, Benefit Claiming and Solvency Under a Partial System of Voluntary Personal Accounts (October 2005). Michigan Retirement Research Center Research Paper No. WP 2005-105, Available at SSRN: https://ssrn.com/abstract=1093822 or http://dx.doi.org/10.2139/ssrn.1093822

Alan L. Gustman (Contact Author)

Dartmouth College - Department of Economics ( email )

6106 Rockefeller Center
Hanover, NH 03755
United States
603-646-2641 (Phone)
603-646-2122 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Thomas L. Steinmeier

Texas Tech University - Department of Economics and Geography ( email )

Lubbock, TX 79409-2101
United States
806-742-2201 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
29
Abstract Views
405
PlumX Metrics