What People Don't Know About Their Pensions and Social Security: an Analysis Using Linked Data from the Health and Retirement Study

75 Pages Posted: 12 Feb 2000 Last revised: 14 Oct 2010

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: September 1999

Abstract

Pension plan descriptions from respondents to the 1992 Health and Retirement Study are compared with descriptions obtained from their employers. Earnings histories reported by respondents are compared with earnings histories from the Social Security Administration. The probability of linking employer pension data, which is two thirds for current jobs, and of obtaining permission to link an earnings history, which is over 70 percent, are not well explained by respondent characteristics. Half of respondents with linked pension data correctly identify plan type, and fewer than half identify, within one year, dates of eligibility for early and normal retirement benefits. Benefit reduction rates are essentially not reported. Respondents do better in reporting pension values, but the unexplained variation is still considerable. In contrast, respondent reported values, together with other observables, account for 80 percent of the variation in pension values and 75 percent of the variation in covered earnings measured from linked records. Thus prospects are good for imputing plan values, but not for imputing the location or size of early retirement incentives. Our findings raise questions about how well respondents understand complex pension and Social Security rules.

Suggested Citation

Gustman, Alan L. and Steinmeier, Thomas L., What People Don't Know About Their Pensions and Social Security: an Analysis Using Linked Data from the Health and Retirement Study (September 1999). NBER Working Paper No. w7368, Available at SSRN: https://ssrn.com/abstract=190375

Alan L. Gustman (Contact Author)

Dartmouth College - Department of Economics ( email )

6106 Rockefeller Center
Hanover, NH 03755
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603-646-2641 (Phone)
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National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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Thomas L. Steinmeier

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

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

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