Effects of After-Tax Pension and Social Security Benefits on Household Wealth: Evidence from a Sample of Retirees
44 Pages Posted: 25 Jun 2007
Date Written: May 30, 2007
We provide the first estimates of how after-tax defined benefit plans and social security affect household wealth. The analysis employs a sample of elderly households with detailed information on lifetime earnings, and follows several recent papers in adjusting pension wealth for the life-cycle. These factors reduce data measurement problems relative to previous research and provide an estimation framework that is consistent with economic theory. Using data on married couples from the 1996 SIPP, we find that after-tax pension benefits have little effect on other wealth among households where the husband did not attend college, but almost completely crowd out other wealth accumulation among households where the husband did attend college.
Keywords: social security, pension, benefits, retirement
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