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Ownership of individual retirement accounts – an empirical analysis based on SHARE

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  • Maria Teresa Medeiros Garcia
  • Pedro Deslandes Correia Vasconcelos Marques

Abstract

This paper examines the household retirement saving decisions in what concerns to the ownership of Individual Retirement Accounts (IRAs) in eight European Union (EU) countries. IRAs are more and more seen as an alternative to public pension benefits, which are decreasing. Therefore, understanding the enrolment in IRAs, both the socio-economic factors and over time, is most important. Detailed empirical analysis of the factors that might influence the ownership of IRAs is presented based on Survey of Health Ageing and Retirement in Europe (SHARE), using data from Wave 2 (2006–2007) and Wave 4 (2010–2011). Further, to analyse the impact of legal retirement age in the ownership of IRAs, two subsamples are considered: people aged between 50 and 64 years old (50–64 years) and people aged 65 or over (≥ 65 years). The results suggest that age, years of education, income and ownership of dwelling influence positively and significantly household saving, while number of children, marital status and risk aversion have a negative effect. Marital status and income are not statistically significant for retired people. Policy implications are derived.

Suggested Citation

  • Maria Teresa Medeiros Garcia & Pedro Deslandes Correia Vasconcelos Marques, 2017. "Ownership of individual retirement accounts – an empirical analysis based on SHARE," International Review of Applied Economics, Taylor & Francis Journals, vol. 31(1), pages 69-82, January.
    • Handle: RePEc:taf:irapec:v:31:y:2017:i:1:p:69-82
    DOI: 10.1080/02692171.2016.1221389
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    References listed on IDEAS

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    1. Philip Cagan, 1965. "The Effect of Pension Plans on Aggregate Saving: Evidence from a Sample Survey," NBER Books, National Bureau of Economic Research, Inc, number caga65-2.
    2. Philip Cagan, 1965. "Possible Effects of Pension Plans on Aggregate National Saving," NBER Chapters, in: The Effect of Pension Plans on Aggregate Saving: Evidence from a Sample Survey, pages 76-80, National Bureau of Economic Research, Inc.
    3. Shelly J. Lundberg & Jennifer Ward-Batts, 2000. "Saving for Retirement: Household Bargaining and Household Net Worth," Econometric Society World Congress 2000 Contributed Papers 1414, Econometric Society.
    4. Philip Cagan, 1965. "Possible Effects of Pension Plans on Aggregate Personal Saving," NBER Chapters, in: The Effect of Pension Plans on Aggregate Saving: Evidence from a Sample Survey, pages 1-7, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Szanyi-Nagy, Sára & Vaskövi, Ágnes, 2021. "Hogyan élnek az európai nyugdíjasok? Egyéni szintű különbözőségek vizsgálata SHARE-adatok alapján [European quality of life in retirement. Analysing personal differences through SHARE data]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1336-1363.

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