Financial Security In Retirement Research Articles

Financial Security in Retirement: The Importance of Savings vs Earnings in Malaysia

Financial Security in Retirement: The Importance of Savings vs Earnings in Malaysia

How Federal Government Policy Helped Create Retirement Insecurity

Financial security in retirement is crucial. Without it, people fall into poverty, work until they die, and die younger than they should. In the 21st century, Americans fund their retirement from Social Security, traditional pension plans, defined contributions plans and private retirement savings plans. Of these four, only Social Security is exclusively the creature of government. Nevertheless, federal law regulates the other three to such an extent that it is fair to say that all four reflect government retirement policy. Since 1974, the federal government has spent billions of dollars supporting the private retirement system. In turn, the private retire-ment system has often failed its participants, sometimes leaving them impoverished. In contrast, Social Security has consistent success in reducing poverty and providing a financially strong old age. The last 50 years demonstrate that the private sector is an unre-liable provider of retirement benefits. Private employers deny their workers retirement benefits, siphon off pension monies for corporate use and declare bankruptcy as a means of leaving their losses to the fed-eral government to make right. In turn, the federal government must spend even more money regulating the private sector and protecting pri-vate workers and their retirement monies. Whatever the theories, we have decades of proof that if the federal government wants to ensure financial security for the elderly, then it should stop providing tax ben-efits and direct payments to private sector retirement plans and instead focus on expanding and strengthening Social Security.

Understanding The Role of Psychological Characteristics in Retirement Planning Among Employees Working in Delhi NCR.

The transition towards retirement needs coping and adapting, both of which provide challenges to psychological health. Notably, the transition into retirement sheds light on the core definition of psychological ageing, which may be summed up as the capacity to adapt not only to internal biological changes but also to changes in the external environment, which can have an impact on psychological health. The ability to adapt not only to internal biological changes but also to changes in the external environment that can have an impact on psychological health is central to the concept of psychological ageing. Since people are becoming more conscious that having financial security in retirement is only one of many crucial factors, there has been a rise in interest in the psychological aspects of retirement. It is highly likely that retirees will struggle with at least some psychological disorders, the severity of which will vary. For instance, a married couple whose ages are widely different but who both work full-time could wonder if they should retire at the same time or wait until one of them reaches a certain milestone age. While one person worked, the other might retire and spend their time relaxing at home by themselves. When faced with such a situation, retirees are prone to have psychological issues, which, in order to achieve their highest possible level of life satisfaction, need to be addressed. The purpose of this study was to investigate how psychological factors influence the retirement planning behaviour of employees in the Delhi National Capital Region. This article examines the challenges that many leaders face when it comes time for them to step down from their positions. It analyses the physical and psychological aspects of ageing and discusses a number of the obstacles that stand in the way of a graceful exit, including financial, social, and psychological factors. In addition to this, it delves into a variety of mental processes that come into play during retirement.
 

CARING FOR CHILDREN WITH DISABILITIES, WORKING, AND SAVING FOR RETIREMENT OVER THE LIFE COURSE

Abstract In the US, financial security in retirement depends on having savings and other assets accumulated during the pre-retirement years. Pension savings accrue over the working life, in defined-benefit or defined-contribution retirement plans. Mothers with children with disabilities experience different life-course work trajectories than mothers without children with disabilities, though data used in previous studies primarily examine a single point in time or a short span of years. This paper draws longitudinal data from the nationally-representative 1979 National Longitudinal Survey of Youth for the years 1987 through 2018, using a life-course perspective and sequence analysis to identify long-term work patterns among women with children who do and do not have disabilities with an explicit focus on variations in occupational class and employment status. We found a distinctive pattern of long-term work history with five types: Full-time semi-professional to not working, Constantly not working, Semi-professional full time, Professional full time, and Not working to full time work. Results from regression analyses revealed variation in mothers’ household financial preparation for retirement at late mid-adulthood. Compared with mothers who held professional full-time jobs throughout their adulthood, mothers who started full time jobs in middle age and have children with disabilities were less likely to have pension plans. Mothers of children with disabilities who left the labor force in early middle age tended to have lower retirement savings. Policy interventions to address these mothers’ caregiving ability to stay engaged in the workforce and prepare for their retirement need to be explored.

Does pension information impact savings?

AbstractMany pension reforms in OECD countries included pension statements with the objective of improving individuals' financial security in retirement. Our objective is to assess the effectiveness of the pension information policy implemented in France and to investigate whether the pension statement results in better informed workers, who then increase their retirement savings. Using regression discontinuity designs combined with quantile regressions, we assess whether the changes in retirement savings and holding of assets are due to the pension information system and then quantify the impact. We conclude that a pension estimate sent to workers encourages the wealthiest to increase their retirement savings while it does not influence the savings of individuals with a low level of wealth.

Retirement Financial Planing and Life Satisfaction

Ageism is an insidious form of injustice that is internalized from an early age with accumulating negative health impacts across the lifespan. Internalized ageism is associated with numerous public health outcomes, including physical and mental health, functional impairment, cognition, cardiovascular stress, hospitalizations, and longevity. Research has begun to document how ageism negatively impacts health through psychological, behavioral, and physiological pathways. Yet, limited research has addressed interventions to reduce internalized ageism. This study integrates stereotype embodiment theory, theories of successful and productive aging, and recent scholarly literature to present a conceptual model with potential downstream, midstream, and upstream interventions at micro, meso, and macro levels. Micro interventions include: social, physical, and cognitive engagement, as well as stress management. Meso interventions include: education, intergenerational contact, and narrative reframing. Macro interventions include anti-ageism policy, such as amendments to the Age Discrimination in Employment Act (ADEA). The conceptual model is described in detail, and implications for practitioners are discussed. The need to examine how policy influences health through the three pathways in stereotype embodiment theory is discussed. This study provides a working model for scholars and practitioners to use when considering paths toward reducing internalized ageism and optimizing well-being for aging adults.

Health and Wealth: The Importance for Lifestyle Medicine

Many people spend years dreaming about their retirement. Unfortunately, today's workers will likely work longer, suffer greater economic uncertainty, and might have poorer health status compared with retirees in previous generations. Preserving good health during the working years is associated with a more consistent employment record, greater financial resources, and reduced risk of disease. Making smart financial decisions as a younger adult also translates to improved finances in retirement. While many people are aware of these relationships, many continue to make poor health choices. Employers and lifestyle medicine professionals can both work to improve financial well-being in retirement. Employers can offer effective worksite financial wellness programs and promote participation in retirement savings programs. Physicians and other health providers can foster healthy behaviors, encourage preventive services compliance, and help adults foster overall financial and health well-being. Adopting a healthy lifestyle as early as possible would increase the likelihood that today's workers will enjoy financial security in retirement.

Gender Disparities in Life Satisfaction After Retirement: The Roles of Leisure, Family, and Finances.

Recent research on life satisfaction in retirement explores gender differences but yields inconsistent patterns and does not consider gendered sources of satisfaction. We use a gender relations framework to examine whether women and men experience different changes in life satisfaction with retirement, and whether observed differences are a consequence of different assessments of the leisure, family, and financial situations that characterize their post-retirement lives. We use longitudinal data drawn from men and women in the Health and Retirement Study who transitioned into retirement between ages 62 and 72 for the first time between 2008 and 2016 (N = 593). We employ ordinary least squares regression and mediation tests to assess gender differences in overall and domain-specific life satisfaction (i.e., leisure, family, finances). Men reported increased life satisfaction following retirement, but women did not. No gender differences related to leisure or family life post-retirement emerged. Gender was associated with post-retirement satisfaction with finances (p < .001), with men reporting higher financial satisfaction. Mediation models confirmed a gender disparity in overall life satisfaction mediated by satisfaction with finances post-retirement (p < .01), explaining approximately one-third of the disparity. This study shows men derive greater improvements in life satisfaction in association with retirement than do women, and some of this disparity relates to women's lower satisfaction with their finances. These findings should caution policy-makers from assuming how women's increased labor force participation influences financial security in retirement, and encourage scholars to consider how gender influences subjective assessments of later life.

Tax incentive and household saving strategy: A regression discontinuity approach to catch-up contributions

ABSTRACT This study examined how the catch-up provision—a tax-deferral incentive—impacts total retirement saving and household saving strategies. Using the Survey of Consumer Finance from 2004 to 2016, this study found that the catch-up provision does not have a positive impact on total retirement saving in the majority of cases; however, this provision was found to positively impact contributions to defined contribution plans among middle-class households whose income ranges were between $50,00 and $100,000. The study also found that household saving and consumption habits, which include self-control factors, as well as employer-match programs, play an important role in increasing savings for retirement. The results of this study have implications for future work on a broad spectrum of social policies and programs that promote financial security in retirement.

Examining Withdrawal in Employee Provident Fund and its Impact on Savings

While the establishment of provident fund is mainly to ensure retirees to be financially secured in old age, pre-retirement withdrawals are commonly permitted for various purposes. These withdrawals had been identified as one of the main causes for low accumulated savings. Using a longitudinal administrative dataset, the paper explored the withdrawal patterns among members of the Malaysian Employees Provident Fund and how much savings would be increased should there be no withdrawal allowed. Based on transaction records from 2002 until 2012, it was found that withdrawal varies by type of withdrawal and age. Preventing withdrawal would increase RM18, 384.10 in median savings. Data indicate that the amount of increment increases with age, however, more than 80% of the members would have an increase in savings of not more than RM50, 000. While the amount of increment in savings is found to be low, other forms of withdrawal should not be permitted if the EPF savings is to ensure financial security in retirement.

Exploitative Contracting in a Life Cycle Savings Model

Pension reforms in OECD countries endow individuals with more responsibility for their financial security in retirement, raising concerns about their ability to select appropriate pension arrangements and save adequately. This paper analyses the interaction between a present-biased individual and a profit-maximising financial provider in order to examine the properties of exploitative savings contracts and the impact of common policy interventions. Using a tractable theoretical model, I find that naive present-biased agents are offered contracts that are `inefficiently cheap' (low-yield, low-fee) when the income effect of an interest rate change dominates in the agent's utility function, and `inefficiently expensive' (high-yield, high-fee) otherwise. Subsequently, I embed the interaction with a pension provider in a numerical life-cycle framework with hyperbolic discounting. Under the benchmark calibration of the model, the savings contract prevailing in market equilibrium is Pareto inefficient and reduces the agent's pension wealth by 10%, lowering expected annual consumption in retirement by 3%. This generates a loss of consumer welfare corresponding to 0.18% of annual consumption.

The Pan-European Pension Product Regulation: A Huge Opportunity for the Luxembourg Fund Industry

Currently, there is a dynamic and ongoing improvement in life expectancies that is not accounted for in pension systems designed to provide financial security in retirement. All over Europe, there are currently employment-based (2nd pillar) pension funds and first pillar pay-as-you-go (PAYG) state pensions systems that are facing huge funding deficits as a result of that. Recently both the EU parliament and the EU Council took their stance on the introduction of an European legal framework for Pan-European Personal Pensions (“PEPP”) an “European 401(k) account” that may prospectively be provided by, amongst others, banks, fund managers, and insurance companies. The introduction of the PEPP could potentially be a solution to mitigate the growing challenge of this so-called “pension gap”, i.e. the gap in savings most people have to ensure they have a good standard of living in retirement. Over the next months the EU parliament and EU Council will be exchanging on how to combine their perspectives in view of a final vote for the introduction of a Pan-European Pension Product Regulation (“PEPPR”). In anticipating a final vote, this contribution discusses the huge opportunity that the introduction of a PEPPR offers to the Luxembourg fund industry. For that purpose, this contribution first provides an overview of the PEPP as a “wrapper (Fund) product”. This article then discusses the PEPP (product) passport and the PEPPR governance provisions (intermediary, product and sales regulation) applicable to PEPP providers, distributors and depositaries. It continues by discussing the opportunities for the Luxembourg fund industry and then concludes.

Saving and the Effectiveness of Financial Education

In this paper, I examine the financial situation of older households. In addition, I examine whether employers’ initiatives to reduce planning costs via retirement seminars have an effect on workers’ saving. Using data from the Health and Retirement Study, I first show that many families arrive close to retirement with little or no wealth. Portfolios are also rather simple, and many families, particularly those with low education, hold little or no high-return assets. I further show that seminars foster saving. This is particularly the case for those with low education and those who save little. By offering financial education, both financial and total net worth increase sharply, particularly for families at the bottom of the wealth distribution and those with low education. Retirement seminars also increase total wealth (inclusive of pension and Social Security) for both high and low education families. Taken together, this evidence suggests that retirement seminars can foster wealth accumulation and bolster financial security in retirement.

Retirement Savings Model Tested With Brazilian Private Health Care Workers.

Retirement is one of the most serious challenges facing Brazil currently, considering the rapid pace of population aging, growing social inequalities, and the difficulty that Brazilians have in planning for their financial future. The number of studies on psychosocial factors in retirement is limited. The aim of this cross-sectional study is to determine Brazilian health workers’ perceptions about financial planning for retirement, based on studies by Hershey and Mowen (2000). In this study, retirement saving – the dependent variable - is highlighted by the use of a model with the following antecedents: parental influence, retirement goal clarity and retirement planning activity level. The goals of the study were to establish mediating and moderating relationships as an innovative approach to the original model. Data was gathered from 319 workers at a private hospital in the municipality of Niterói, Rio de Janeiro (Brazil) who filled out a questionnaire concerning their saving behaviors and antecedents. Results indicated a model in which goal clarity mediated the relationship between parental influence and retirement saving, and retirement activity was observed to influence the level of retirement saving. The findings confirmed the complexities of financial planning for retirement, and emphasized important factors, such as parental advice starting in childhood and the effect of this advice on goal clarity. The results also pointed to the role of individual responsibility in the process, which depended on establishing a plan for activities. In addition to parental advice, an educational approach can contribute encouraging saving behaviors and helping retirees achieve financial security in retirement.

Population ageing in a globalized world: Risks and dilemmas?

This article aims to examine global population ageing and to evaluate the likely risks and dilemmas of demographic ageing within the context of the health and well-being of individuals. This paper is based on the author's research in the field of social gerontology, demography, and public health. In addition, a literature review has been carried out focused on the objectives of the research. The study has identified potential risks and dilemmas that the older people may face in the globalized world. There are four main aspects that contribute to an unequal distribution of risks in later life: (a) burden of disease in epidemiological transition, (b) financial security in retirement, (c) familial resources for older peoples' care, and (d) availability of workforce for older peoples' care. Whilst population ageing is a global trend, its impact is not equal across the world, and this is highlighted in this research. There are some important dilemmas which are identified in this paper that may also fuel the potential risks and challenges facing ageing societies. It is apparent that older people will face numerous risks in later life and those in developing countries are likely to face more challenges than those in developed countries. The findings may be useful to policymakers for formulating future plans and policy implementation. Further research is required to identify the number of health care workers needed to tackle the challenges of an ageing societies across the globe.

INFORMING RETIREMENT SAVINGS DECISIONS: A FIELD EXPERIMENT ON SUPPLEMENTAL PLANS

Although supplemental saving plans can be an important part of an individual's financial security in retirement, contribution rates remain low, particularly among those with lower salaries and less education. We report findings from an intervention that provided information on key aspects of the employer‐provided supplemental saving plans to older public employees in North Carolina. Among workers participating in a supplemental plan, individuals who received an informational flyer increased their contributions in the months following the intervention relative to the control group. In contrast, individuals who were not enrolled in a retirement saving plan were not moved to begin contributing to a supplemental plan. The results suggest that informational interventions can induce workers who are already engaged in the saving process to reassess their level of retirement preparedness. (JEL C93, D14, D9)

Logistic regression analysis of financial literacy implications for retirement planning in Croatia

The relationship between financial literacy and financial behavior is important, as individuals are increasingly being asked to take responsibility for their financial wellbeing, especially their retirement. Analyzing of individual savings and attitudes towards retirement planning is important, as these types of investments are a way of preserving security during years of financial vulnerability. Research indicates that individuals who do not save adequately for their retirement, generally have a relatively low level of financial literacy. This research investigates the relationship between financial literacy and retirement planning in Croatia. To analyze the relationship between financial literacy and planning for retirement, maximum likelihood logistic regression analysis was used. The paper shows that those who answer financial literacy questions correctly are more likely to have a positive attitude towards retirement planning and are more likely to save for retirement, ensuring them of higher levels of financial security in retirement. The Goodness-of-Fit evaluation for the estimated logit model was performed using the Andrews and Hosmer-Lemeshow Tests.

Impact of Financial Literacy on the Behavioral Biases of Individual Stock Investors: Evidence from Borsa Istanbul

1. IntroductionFinancial literacy has been attracting attention at an increasing rate due to factors such as increasing complexity and variety of financial products and services, sophisticated financial that households have to deal with, shifted responsibility for financial security in retirement from government onto and changing economic and demographic factors. This is in line with the findings of a research study conducted by the International Network on Financial Education (INFE) of OECD. The study finds that financial ignorance was one of the factors that exacerbated the impact of the 2007-2009 global financial crisis.Financial literacy is now globally recognized as an important element of economic and financial stability and development (INFE, 2009). Reflecting this importance, many institutions (e.g. Jump$tart Coalition for Personal Financial Literacy, National Endowment for Financial Education, Global Financial Literacy Excellence Centre) works on financial literacy at a national or global scale. Much of this work aims to improve individuals' knowledge, with the assumption that increase in knowledge will lead to changes in financial behavior and practice. The validity of this assumption is an issue of interest to the field of behavioral finance, which aims to shed light on financial behavior by drawing on the disciplines of economics and psychology (Hilgert, Hogarth, and Beverly, 2003: 309).Statman (1995: 14) defines mainstream finance as a body of knowledge that is built on a number of fundamental principles such as the Miller-Modigliani arbitrage principle, Markowitz's portfolio theory, Linter and Sharpe's capital asset pricing theory and Black-Scholes-Merton option pricing theory. Mainstream finance has shown growth in years based on two fundamental assumptions: Individuals make rational decisions and individuals are without prejudice in forecasting the future. (Nofsinger, 2004: 1). However, behavioral finance, a sub-branch of finance, is based on the assumption that are not fully rational. Thus, behavioral finance is a field that has emerged as an attempt to understand how emotions and cognitive errors affect the decision-making processes of investors (Suer, 2007: 97). Studies conducted in this field has shown that when making financial decisions, may behave irrationally and be under the influence of certain behavioral biases, defined as systematic judgment errors (Kahneman & Riepe, 1998: 53).In summary, financial literacy is a key point to be considered when the competence to make well-informed financial comes into question. However, it is not the only significant determinant of sound financial decision making. Behavioral biases, which affect investor behavior, also play a critical role in this process. People can suffer from behavioral biases and behave irrationally and as a result, can make investment mistakes. On the one hand financial literacy leads to better financial decisions; on the other hand, behavioral biases cause irrational financial behavior.Although financial literacy is an increasingly important topic in the world as well as in Turkey, academic work based on Turkish data is not abundant. In particular, studies that assess the level of financial literacy and examine its relationship with behavioral biases are scarce. We thus aim to investigate the association between financial literacy and behavioral biases, which may trigger irrationality during the financial decision-making process. This paper contributes to the literature concerning financial literacy level of stock investors and the impact of financial literacy level on the level of behavioral biases.The main research question addressed in this paper is: Is there a relationship between a decision maker's financial literacy level and the level of behavioral bias? In order to answer this question, the relationship between the level of financial literacy and the level of behavioral biases of individual stock investors, whose financial have a material impact not only on their own financial well-being but also on the overall economy, was examined. …

Retirement Security 2015: Roadmap for Policy Makers - Americanss Views of the Retirement Crisis

A new nationwide public opinion research report finds that an overwhelming majority of Americans – 86 percent – believe the nation faces a retirement crisis.These findings are contained in a new research report, Retirement Security 2015: Roadmap for Policy Makers Americans’ Views of the Retirement Crisis.More specifically, the research finds that:1. An overwhelming majority of Americans believe there is a retirement crisis. Some 86 percent agree that the nation faces a retirement crisis, and 57 percent strongly agree there is a crisis.2. Three in four Americans remain highly anxious about their retirement outlook, but the concern has dissipated slightly as the economy has recovered. Some 74 percent of Americans percent say they are concerned, down from 85 percent as reported in the 2013 study.3. Even though Americans feel slightly less stressed about their retirement prospects, support for steady and reliable retirement income from a pension is high and growing. In fact, 82 percent say a pension is worth having because it provides steady income that won’t run out, while 67 percent of Americans indicate they would be willing to take less in pay increases in exchange for guaranteed income in retirement.4. Americans continue to feel that leaders in Washington do not understand their struggle to save for retirement, and they strongly support efforts by states to set up retirement plans for those workers without access to an employer sponsored plan. Some 87 percent of Americans say Washington policymakers do not understand how hard it is to prepare for retirement, while 84 percent say Washington needs to do more to help ensure retirement security.5. Americans see retirement benefits as a job feature that is almost as important as salary. Salary is viewed as important by 75 percent of American, and retirement benefits are close behind at 72 percent.6. Americans express strong support for pensions for public employees. Few Americans realize that 75 percent of public pension costs are paid for with employee contributions and investment returns. Some 87 percent of Americans say pensions are a good way to recruit and retain qualified teachers, police officers and firefighter. But, only one-fourth of Americans understood that public employers pay for 25 percent or less of public pension costs. More than eight out of ten — a vast majority of Americans — say that all employees, not just the public sector, should have a pension. Some 87 percent of Americans say pensions are a good way to recruit and retain qualified teachers, police officers and firefighters.7. Protecting Social Security benefits is increasingly important. Some 73 percent of Americans say it’s a mistake to cut government spending in such a way as to reduce Social Security benefits for current retirees, up from 67 percent in 2013. When it comes to benefits for future generations, 69 percent oppose cutting government spending that reduces Social Security benefits. Americans are divided when it comes to increasing the amount of Social Security benefits by delaying the withdrawal of benefits at an older age: 42 percent agree with a delay while 52 percent disagree.This biennial nationwide public opinion research is the fourth poll that measures how Americans feel about their financial security in retirement and assesses their views on policies that could improve their retirement outlook. It is intended to serve as a tool for policymakers, thought leaders and retirement service providers as they work to stem the retirement crisis and re-fortify the U.S. retirement infrastructure.The polling was conducted by Greenwald & Associates as a nationwide telephone interview of 801 Americans age 25 or older. The data was balanced to reflect U.S. demographics for age, gender, and income. The margin of error is plus or minus 3.5 percent.

The Potential Effects of Obesity on Social Security Claiming Behavior and Retirement Benefits.

Obesity prevalence among Americans has increased for nearly three decades. We explore the relationship between the rise in obesity and Social Security retirement benefit claiming, a decision impacting nearly all aging Americans. Specifically, we investigate whether obesity can affect individuals' decision to claim benefits early, a choice that has important implications for financial security in retirement, particularly for those with lower socioeconomic status (SES). We use a microsimulation model called MINT6 (Modeling Income in the Near Term, version 6) to demonstrate the potential effects of obesity on subjective life expectancy and claiming behavior. We impute obesity status using data from the National Health and Nutrition Examination Survey (NHANES), which describes the distribution of obesity prevalence within the United States by gender, poverty status, and race/ethnicity. We find that the rise in obesity and the consequent incidence of obesity-related diseases may lead some individuals to make claiming decisions that lead to lower monthly and lifetime Social Security retirement benefits. Further, we find that the potential economic impact of this decision is larger for those with lower SES. We present a behavioral perspective by addressing the potential effects that obesity can have on individuals' retirement decisions and their resulting Social Security retirement benefits.