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James Poterba. MIT and NBER . Adjusting Institutions for an Aging Society. Heterogeneity in Male @ 65 Life Expectancy . Source: Waldron (2007). Sample: men w/positive earnings, ages 45-55. Relative Incidence of Disease by Education Status. Source: Smith (2014).

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slide1
James Poterba

MIT and NBER

Adjusting Institutions for an Aging Society

heterogeneity in male @ 65 life expectancy
Heterogeneity in Male @ 65 Life Expectancy

Source: Waldron (2007). Sample: men w/positive earnings, ages 45-55.

sources of income individuals 65 2013
Sources of Income, Individuals 65+, 2013

Mean Income = $6756 Mean Income = $78180

Source: Poterba (2014).

household balance sheets 65 69 in 2008
Household Balance Sheets, 65-69, in 2008

Source: Poterba, Venti, & Wise (2013).

expected years of work and leisure @ 65
Expected Years of Work and “Leisure” @ 65

Source: Ghilarducci (2008) with updates.

expected years of work and leisure @ 651
Expected Years of Work and “Leisure” @ 65

Source: Ghilarducci (2008) with updates.

risk points in retirement saving
“Risk Points” in Retirement Saving
  • Employer Decision to Offer Retirement Plan
  • Employee Decision to Participate and Amount to Contribute
  • Early Withdrawal Risk: Loans and Lump-Sums Plan Risks
  • Drawdown Pattern: Annuitize or Not?
  • Financial Literacy is a Challenge for Many
financial literacy
Financial Literacy
  • If $100 earns 2% per year for five years, how much will you have in the account? (< $102, $102, < $102) 67% correct
  • If the interest rate on your saving account is 1% per year, and inflation is 2% per year, in a year, can you buy more, the same, or less? 75% correct
  • True or False: Buying a single company stock usually provides a safer return than a share of a mutual fund. 52% correct
  • All three correct: 34%
  • Source: Lusardi and Mitchell (2014).
401 k participation before after automatic enrollment enroll
401(k) Participation Before & After Automatic Enrollment Enroll

After

Before

Source: Choi, Laibson, Madrian, and Metrick (2004)

references
References
  • D. Choi, D. Laibson, B. Madrian, and A. Metrick, “For Better or For Worse: Default Effects and 401(k) Savings Behavior,” NBER WP #8651.
  • T. Ghilarducci, When I’m Sixty-Four. 2008.
  • A. Lusardi and O. Mitchell, “Economic Importance of Financial Literacy,” Journal of Economic Literature 2014.
  • J. Poterba, “Retirement Security in an Aging Population,” American Economic Review 2014.
  • J. Poterba, S. Venti, D. Wise, “Drawdown of Personal Retirement Assets,” Journal of Economic Perspectives 2013.
  • J. Smith, “Using International Country Data to Learn About Health,” Presentation at National Institute of Aging Conference, 2014.
  • H. Waldron, “Trends in Mortality Differentials and Life Expectancy…,” Social Security Bulletin 2007.