How Prepared are State and Local Workers for Retirement?

34 Pages Posted: 8 Nov 2011

See all articles by Jean-Pierre Aubry

Jean-Pierre Aubry

Boston College - Center for Retirement Research

Laura Quinby

Boston College - Center for Retirement Research

Alicia H. Munnell

Boston College - Center for Retirement Research

Josh Hurwitz

affiliation not provided to SSRN

Date Written: October 1, 2011

Abstract

A widespread perception is that state-local government workers receive high pension benefits which, combined with Social Security, provide more than adequate retirement income. This study uses the Health and Retirement Study (HRS) and actuarial reports to test this hypothesis. The major finding from the HRS analysis is that most households with state-local employment end up with replacement rates that, while on average higher than those in the private sector, are well below the 80 percent needed to maintain pre-retirement living standards. Even those households with a long-service state-local worker – those who spend more than half of their careers in public employment – have a median replacement rate, including Social Security, of only 72 percent. And this group accounts for less than 30 percent of state-local households. The remaining 70 percent of households with a short- or medium-tenure state-local worker have replacement rates of 48 percent and 57 percent, respectively. Adding income from financial assets still leaves most state-local households short of the target.

Keywords: state-local, government, workers, social security, Health and Retirement Study

JEL Classification: H55, J21, J23, H72

Suggested Citation

Aubry, Jean-Pierre and Quinby, Laura and Munnell, Alicia and Hurwitz, Josh, How Prepared are State and Local Workers for Retirement? (October 1, 2011). Available at SSRN: https://ssrn.com/abstract=1955984 or http://dx.doi.org/10.2139/ssrn.1955984

Jean-Pierre Aubry (Contact Author)

Boston College - Center for Retirement Research ( email )

Fulton Hall 550
Chestnut Hill, MA 02467
United States

Laura Quinby

Boston College - Center for Retirement Research ( email )

140 Commonwealth Avenue
Boston, MA 02467
United States

Alicia Munnell

Boston College - Center for Retirement Research ( email )

Fulton Hall 550
Chestnut Hill, MA 02467
United States
617-552-1762 (Phone)

Josh Hurwitz

affiliation not provided to SSRN

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