Social Security Literacy and Retirement Well-Being
35 Pages Posted: 21 Nov 2009
Date Written: September 1, 2009
Abstract
We build upon the growing literature on financial literacy, which studies the prevalence of lack of knowledge about various financial issues, and analyze how much people know about the Social Security rules using a small pilot survey conducted in 2007, and a follow-up and extended survey funded by MRRC conducted in December of 2008. We then assess the consequences of the apparent prevalence of lack of information by individuals about the rules governing the Social Security system using a realistic and empirically-based life-cycle model of retirement behavior under uncertainty. We investigate the individual’s retirement and savings decisions under incomplete information and unawareness, in which a portion of the population does not know some or all of the rules of the system. We compare the outcomes in these cases to the outcome under full information, computing the welfare gain resulting from the acquisition of information regarding the Social Security system. Our analysis can illuminate the need for policies that foster knowledge of the system, which can improve welfare, and can result in better policy outcomes.
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
By Barry Bosworth, Gary Burtless, ...
-
Measuring Retirement Income Adequacy: Calculating Realistic Income Replacement Rates
-
What Replacement Rates do Households Actually Experience in Retirement?
By Alicia H. Munnell and Mauricio Soto
-
What Replacement Rates Do Households Actually Experience in Retirement?
By Alicia H. Munnell and Mauricio Soto
-
Social Security Replacement Rates for Own Earnings Benchmarks
-
Social Security Replacement Rates for Alternative Earnings Benchmarks
-
Modeling Lifetime Earnings Paths: Hypothetical Versus Actual Workers
By Andrew Au, Olivia S. Mitchell, ...
-
Alternative Measures of Replacement Rates
By Michael D. Hurd and Susann Rohwedder
-
Lifetime Earnings Variability and Retirement Wealth
By Olivia S. Mitchell, John W. R. Phillips, ...