Effects of After-Tax Pension and Social Security Benefits on Household Wealth: Evidence from a Sample of Retirees

44 Pages Posted: 25 Jun 2007

See all articles by William G. Gale

William G. Gale

Brookings Institution

Michael Dworsky

Brookings Institution

John W. R. Phillips

National Institutes on Aging

Leslie Muller

Social Security Administration

Date Written: May 30, 2007

Abstract

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

Suggested Citation

Gale, William G. and Dworsky, Michael and Phillips, John W. R. and Muller, Leslie, Effects of After-Tax Pension and Social Security Benefits on Household Wealth: Evidence from a Sample of Retirees (May 30, 2007). Available at SSRN: https://ssrn.com/abstract=994920 or http://dx.doi.org/10.2139/ssrn.994920

William G. Gale (Contact Author)

Brookings Institution ( email )

1775 Massachusetts Avenue, NW
Washington, DC 20036
United States
202-797-6148 (Phone)
202-797-6181 (Fax)

Michael Dworsky

Brookings Institution ( email )

1775 Massachusetts Ave, NW
Washington, DC 20036
United States

John W. R. Phillips

National Institutes on Aging ( email )

Building 31, Room 5C27
31 Center Drive, MSC 2292
Bethesda, MD 20892
United States

Leslie Muller

Social Security Administration ( email )

Washington, DC 20254
United States

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