Retirement Savings of the Hip Generation: A Study of Retirement Preparation among Individuals in Their Fifties
Southwestern Economic Review, Forthcoming
16 Pages Posted: 31 Oct 2018
Date Written: 2018
Longer retirement periods coupled with the inadequacy of the Social Security system, low personal savings rates, and a decreasing trend in the prevalence of defined benefit retirement plans threaten to put a financial strain on individuals approaching retirement. To that end, we investigate retirement preparation among individuals in their fifties. Probit analysis was conducted using data from the 1995 Survey of Consumer Finances. Regarding individuals in their fifties, the findings indicate that good health and work history have significant positive effects on retirement plan eligibility. In addition, income has a significant positive effect on retirement plan eligibility for both men and women in their fifties. In contrast, age and education levels have significant negative effects regarding pension plan eligibility for both sexes in their fifties.
The findings regarding retirement plan contributions indicate significant positive effects regarding income and women. Therefore, the findings generally support the hypothesis of income as a predictor of retirement plan preparation for women in their fifties. In addition, the findings indicate that women who are married or living with a partner are more likely to contribute to their pension plans through work.
Education is also significant as a predictor of the decision to contribute to a pension plan for women in their fifties. In addition, the findings regarding work history (length of employment and number of weeks worked per year) and household size were significant and negative for women in their fifties. Finally, health and household status is not significant as a predictor of the decision to contribute to a pension plan. Therefore, the findings do not support the hypotheses of excellent health and homeownership as a predictor contributing to an employer sponsored pension plan.
Keywords: Retirement plan, Social security, Personal saving, Consumer finance, Probit analysis, Income, Education
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