The Impact of Auto Portability on Preserving Retirement Savings Currently Lost to 401(k) Cashout Leakage

2019 ◽  
Author(s):  
Jack VanDerhei
Keyword(s):  
Retirement Savings ◽  
The Impact

Family Caregiving and the Intergenerational Transmission of Poverty

2018 ◽  
Vol 46 (3) ◽  
pp. 629-635 ◽  
Author(s):  
Richard L. Kaplan
Keyword(s):  
Social Security ◽  
Family Caregivers ◽  
Intergenerational Transmission ◽  
Family Caregiving ◽  
The United States ◽  
Retirement Savings ◽  
Term Care ◽  
Retirement Benefits ◽  
Lifetime Earnings ◽  
The Impact

The United States relies on uncompensated family caregivers to provide most of the long-term care required by older adults as they age. But such care comes at a significant financial cost to these caregivers in the form of lower lifetime earnings and diminished (or even no) Social Security retirement benefits, ineligibility for Medicare coverage of their healthcare costs, and minimal retirement savings. To reduce the impact of uncompensated caregiving on the intergenerational transmission of poverty, this paper discusses three possible mechanisms of compensating family caregivers: public payments, deemed wage credits under Social Security, and income tax incentives.

scholarly journals The impact of participation in employment-based retirement savings plans on material hardship

2015 ◽  
Vol 15 (4) ◽  
pp. 407-428
Author(s):  
BRADLEY T. HEIM ◽  
SHANTHI P. RAMNATH
Keyword(s):  
Income Distribution ◽  
Low Income ◽  
Positive Impact ◽  
Retirement Savings ◽  
Program Participation ◽  
Material Hardship ◽  
Short Term ◽  
Financial Difficulties ◽  
Using Data ◽  
The Impact

AbstractTo contribute to a retirement plan (barring an increase in income), an individual must either reduce consumption or increase debt. Using data from the 2004 wave of the Survey of Income and Program Participation, we examine the extent to which contributing to 401(k)-type accounts leads to an increase in short-term financial difficulties, particularly among low-income individuals. After instrumenting for plan take-up, we find that contributing to a 401(k) plan appears to have a small positive impact on the presence of any material hardship and debt holding among the lowest income quintiles, though that effect diminishes further up the income distribution.

scholarly journals The Impact of Mutual Fund Family Membership on Investor Risk

2007 ◽  
Vol 42 (2) ◽  
pp. 257-277 ◽  
Author(s):  
Edwin J. Elton ◽  
Martin J. Gruber ◽  
T. Clifton Green
Keyword(s):  
Mutual Fund ◽  
Retirement Savings ◽  
Portfolio Risk ◽  
Economic Sectors ◽  
The Family ◽  
Additional Fund ◽  
Fund Families ◽  
Mutual Fund Family ◽  
The Impact ◽  
Family Membership

AbstractMany investors confine their mutual fund holdings to a single fund family either for simplicity or through restrictions placed by their retirement savings plan. We find evidence that mutual fund returns are more closely correlated within than between fund families. As a result, restricting investment to one fund family leads to a greater total portfolio risk than diversifying across fund families. We examine the sources of this increased correlation and find that it is due primarily to common stock holdings, but is also more generally related to families having similar exposures to economic sectors or industries. Fund families also show a propensity to focus on high or low risk strategies, which leads to a greater dispersion of risk across restricted investors. An investor considering adding an additional fund, either in the same family or outside the family, would need to believe the inside fund offered an extra 50 to 70 basis points to have the same Sharpe ratio.

scholarly journals An Empirical Analysis of the Displacement Effect of TFSAs on RRSPs

2019 ◽  
Vol 67 (2) ◽  
pp. 309-333
Author(s):  
Leslie Berger ◽  
Jonathan Farrar ◽  
Lu Zhang
Keyword(s):  
Empirical Evidence ◽  
Empirical Analysis ◽  
Retirement Savings ◽  
Displacement Effect ◽  
Canadian Government ◽  
Tax Revenues ◽  
Percent Increase ◽  
Using Data ◽  
The Impact

The tax-free savings account (TFSA), introduced in 2009, was intended by the Canadian government to provide an alternative catchment for savings in addition to registered retirement savings plans (RRSPs). However, little empirical evidence exists regarding the impact of saving in TFSAs on saving in RRSPs. To investigate this issue, we conduct empirical analysis, using data from Statistics Canada's Longitudinal Administrative Databank, which contains annual TFSA and RRSP contributions for a sample of 20 percent of all Canadian taxfilers. We find evidence of a displacement effect of TFSAs on RRSPs: every 1 percent increase in a TFSA contribution reduces an RRSP contribution by approximately 0.4 percent. Our findings have implications for Canadians' ability to self-fund their retirement, as well as for the Canadian government's ability to generate future tax revenues.

Financial planning for retirement: the role of income

2019 ◽  
Vol 37 (6) ◽  
pp. 1419-1440
Author(s):  
Milagros Vivel-Búa ◽  
Lucía Rey-Ares ◽  
Rubén Lado-Sestayo ◽  
Sara Fernández-López
Keyword(s):  
Driving Forces ◽  
Pension Plans ◽  
Retirement Savings ◽  
Content Type ◽  
Working Lives ◽  
Future Income ◽  
Wealth Inequalities ◽  
The Individual ◽  
The Impact

PurposeThe purpose of this paper is to study the driving forces of both the decision to participate in individual pension plans and the amount of money allocated to such plans. Moreover, this paper evaluates the potential role that income plays, which has not previously been considered in depth in the financial literature.Design/methodology/approachBased on a sample of the Spanish population over the period 2008–2015, this paper estimates probit and tobit models, using 165,791 observations. The driving forces of private retirement savings comprise demographic, financial and socio-economic characteristics.FindingsThis paper confirms the impact of socio-demographic and economic variables on participation and monetary contributions to pension plans. It also confirms that income plays a non-negligible role. Moreover, empirical evidence reveals that the effect of gender is related to the income stratum to which the individual belongs.Originality/valueRetirement planning plays a key role in retirees’ future income and several countries have emphasised the importance of private individual savings to supplement the minimum provided by public pension schemes. The previous literature has concluded that those who plan their retirement end their working lives with three times the wealth of non-planners. Consequently, analysis of whether people are saving enough for their retirement can contribute to avoiding future wealth inequalities among retirees. Spain is one of the countries with the greatest inequality in income distribution, so this issue is of even greater interest.

scholarly journals Impacto de la educación financiera en la tasa de ahorro para el retiro (Impact of Financial Education on the Retirement Savings Rate)

2018 ◽  
Vol 14 (27) ◽  
Author(s):  
Aarón González Vazquez ◽  
Azucena Alejandra Acevez Alós ◽  
Daniel Prado Mendoza
Keyword(s):  
Financial Education ◽  
Financial Knowledge ◽  
Retirement Savings ◽  
Window Of Opportunity ◽  
Nuevo Leon ◽  
Great Opportunity ◽  
Population Pyramid ◽  
Nuevo León ◽  
Savings Rate ◽  
The Impact

En el presente estudio se expone el grado de influencia que ejerce la educación y conocimiento financiero que tienen los nuevoleoneses, en especial quienes viven en la zona metropolitana de Monterrey, en su decisión deliberada de ahorrar para su retiro. Se reflexiona sobre el reto que representa para la nueva sociedad el cambio demográfico que está envejeciendo la pirámide poblacional. Se aborda el tema de la gran oportunidad que nos ofrece el bono demográfico, llamado “la ventana de oportunidad”, así como de la situación actual del ahorro en la población. Se muestra brevemente el impacto que tiene la educación en el desarrollo de la persona, así como la educación financiera para tomar mejores decisiones en la vida. Finalmente, se muestran y discuten los resultados que tiene la educación financiera en un segmento de la sociedad de Monterrey, Nuevo León, México.Palabras claves: educación financiera, tasa de ahorro para el retiro.Summary.The present study shows the influence of education and financial knowledge of Nuevo Leon, especially those living in the metropolitan area of Monterrey, in their deliberate decision to save for retirement. It reflects on the challenge posed to the new society by the demographic change that is aging the population pyramid. It addresses the great opportunity offered by thedemographic bonus, called “the window of opportunity”, as well as the current situation of saving in the population. It shows briefly the impact that education has on the development of the person, as well as financial education to make better decisions in life. Finally, the results of financial education in a segment of Monterrey, Nuevo León, Mexico, are shown and discussed.Key words: financial education, retirement savings rate. 

Improving the Retirement Prospects of Lower-Wage Workers in a Defined-Contribution World

2007 ◽  
Vol 88 (3) ◽  
pp. 453-462 ◽  
Author(s):  
Judith G. Gonyea
Keyword(s):  
Financial Literacy ◽  
Pension Plans ◽  
Individual Responsibility ◽  
Retirement Savings ◽  
Defined Contribution ◽  
Savings Behavior ◽  
Service Workers ◽  
Retirement Security ◽  
Lower Wage ◽  
The Impact

Lower-wage workers have always faced challenges in saving for their retirement years. As U.S. businesses increasingly adopt defined-contribution pension plans and emphasize individual responsibility and choice, what is the impact of this shift on the working poor? Lack of pension coverage is a significant concern because Social Security alone will not assure a comfortable retirement for lower-income workers. Our survey of more than 300 lower-wage service workers revealed that significant predictors of retirement savings behavior included greater financial literacy as well as greater job stability, stronger workforce attachment, and higher income. Employer-sponsored pension plans were the most frequently used savings option. Based on the findings, we explore the potential impacts of the Pension Protection Act of 2006 (PPA) on lower-wage workers' retirement security and propose policy steps to reduce the risk of poverty being recycled into postretirement years.

Impact of defaults on participation in state supplemental retirement savings plans

2021 ◽  
pp. 1-16
Author(s):  
Robert L. Clark ◽  
Denis Pelletier
Keyword(s):  
South Dakota ◽  
Participation Rate ◽  
Pension Plan ◽  
Retirement Savings ◽  
Defined Benefit ◽  
Defined Benefit Pension Plan ◽  
State And Local Government ◽  
State And Local ◽  
The Impact ◽  
Newly Hired

Abstract This study examines the impact of the adoption of automatic enrollment provisions by the state of South Dakota for its supplemental retirement saving plan (SRP). In South Dakota, state and local government employees, including teachers, are covered by a defined benefit pension plan and by Social Security. Prior to the introduction of automatic enrollment, the proportion of newly hired employees who were contributing to the SRP was less than 5% in their first year of employment. After the introduction of automatic enrollment, over 90% of newly hired workers who were auto-enrolled were participating in the plan. Using a difference-in-difference approach we find that automatic enrollment changes differences in the participation rate by age, sex, and income. We also find that prior to the adoption of auto-enrollment, agencies that ultimately chose to implement this policy had higher participation rates compared to those that did not adopt auto-enrollment.

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