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How much do lifetime earnings explain retirement resources?

Author

Listed:
  • Antoine Bozio

    (Institute for Fiscal Studies and Paris School of Economics)

  • Carl Emmerson

    (Institute for Fiscal Studies and Institute for Fiscal Studies)

  • Gemma Tetlow

    (Institute for Fiscal Studies)

Abstract

We use a unique dataset, containing individual survey data from the English Longitudinal Study of Ageing linked to administrative data on earnings histories from administrative records, to construct measures of lifetime earnings and examine how these relate to financial resources in retirement. Retirement income and wealth at retirement is, as expected, positively correlated with lifetime earnings but there is also substantial dispersion in retirement income and retirement wealth among people with similar lifetime earnings. For example, we find that those with greater numerical ability and higher education tend to have greater retirement resources even after controlling for differences in lifetime earnings. The retirement resources of single women are far less well explained by their own lifetime earnings than those of couples or single men. We hypothesise that, as the vast majority of single women in the age group considered had previously been married and are now widowed or divorced, this reflects the fact that we do not observe the lifetime earnings of their former spouses.

Suggested Citation

  • Antoine Bozio & Carl Emmerson & Gemma Tetlow, 2011. "How much do lifetime earnings explain retirement resources?," IFS Working Papers W11/02, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:11/02
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    File URL: http://www.ifs.org.uk/wps/wp1102.pdf
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    Citations

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    Cited by:

    1. Antoine Bozio & Carl Emmerson & Cormac O'Dea & Gemma Tetlow, 2013. "Savings and wealth of the lifetime rich: evidence from the UK and US," IFS Working Papers W13/30, Institute for Fiscal Studies.
    2. Jean Gardiner & Andrew M Robinson & Fathi Fakhfakh, 2016. "Exploring the private pension gender gap and occupation in later working life," Work, Employment & Society, British Sociological Association, vol. 30(4), pages 687-707, August.
    3. Rowena Crawford & Cormac O'Dea, 2014. "Cash and Pensions: Have the elderly in England saved optimally for retirement?," IFS Working Papers W14/22, Institute for Fiscal Studies.
    4. Kanabar, Ricky, 2015. "Post-retirement labour supply in England," The Journal of the Economics of Ageing, Elsevier, vol. 6(C), pages 123-132.
    5. Lührmann, Melanie & Serra-Garcia, Marta & Winter, Joachim, 2015. "Teaching teenagers in finance: Does it work?," Journal of Banking & Finance, Elsevier, vol. 54(C), pages 160-174.
    6. Rowena Crawford & Cormac O'Dea, 2014. "Retirement sorted? The adequacy and optimality of wealth among the near-retired," IFS Working Papers W14/23, Institute for Fiscal Studies.
    7. James M. Poterba & Steven F. Venti & David A. Wise, 2015. "What Determines End-of-Life Assets? A Retrospective View," NBER Chapters, in: Insights in the Economics of Aging, pages 127-157, National Bureau of Economic Research, Inc.
    8. Winter, Joachim & Lührmann, Melanie & Serra Garcia, Marta, 2013. "The effects of financial literacy training: Evidence from a field experiment in German high schools," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79744, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    Lifetime earnings; savings; wealth; retirement;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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