IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/10305.html
   My bibliography  Save this paper

Personal Accounts and Family Retirement

Author

Listed:
  • Alan L. Gustman
  • Thomas L. Steinmeier

Abstract

This paper constructs a model of retirement and saving by two earner couples. The model includes three dimensions of behavior: the joint determination of retirement and saving; heterogeneity in time preference; and the interdependence of retirement decisions of husbands and wives. Estimation is based on panel data from the Health and Retirement Study covering the period 1992 to 2000. When husbands postpone their retirement so they can retire together with their typically younger wives, the spike in retirement at age 62 is smeared to later ages. Thus retirements differ between one and two earner families. We find both an asymmetry in which husbands prefer their wife to be retired before they retire, and a clear distaste of many husbands to retiring when their wives are in poor health, while the wives are willing to stay at home with sickly husbands. We simulate a system of personal Social Security accounts based on a 10.6 percent contribution rate over the lifetime. One version allows individuals to make lump sum withdrawals at retirement instead of annuitizing. This program would increase the retirement rates of husbands at age 62 by about 15 percentage points compared to the current system. Adding a lump sum option, by itself, would increase retirements at 62 by about 6 percentage points.

Suggested Citation

  • Alan L. Gustman & Thomas L. Steinmeier, 2004. "Personal Accounts and Family Retirement," NBER Working Papers 10305, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:10305
    Note: AG LS PE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w10305.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Alan L. Gustman & Thomas L. Steinmeier, 2004. "Social security, pensions and retirement behaviour within the family," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(6), pages 723-737.
    2. Blau, David M, 1998. "Labor Force Dynamics of Older Married Couples," Journal of Labor Economics, University of Chicago Press, vol. 16(3), pages 595-629, July.
    3. David M. Blau & Donna B. Gilleskie, 2008. "The Role Of Retiree Health Insurance In The Employment Behavior Of Older Men," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(2), pages 475-514, May.
    4. Michael D. Hurd, 1990. "The Joint Retirement Decision of Husbands and Wives," NBER Chapters, in: Issues in the Economics of Aging, pages 231-258, National Bureau of Economic Research, Inc.
    5. Eric French, 2005. "The Effects of Health, Wealth, and Wages on Labour Supply and Retirement Behaviour," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(2), pages 395-427.
    6. Donna B. Gilleskie & David M. Blau, 2006. "Health insurance and retirement of married couples," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(7), pages 935-953.
    7. Feldstein, Martin & Liebman, Jeffrey B., 2002. "Social security," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324, Elsevier.
    8. David A. Wise, 1990. "Issues in the Economics of Aging," NBER Books, National Bureau of Economic Research, Inc, number wise90-1.
    9. Gustman, Alan L. & Steinmeier, Thomas L., 2005. "The social security early entitlement age in a structural model of retirement and wealth," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 441-463, February.
    10. Diamond, P. A. & Hausman, J. A., 1984. "Individual retirement and savings behavior," Journal of Public Economics, Elsevier, vol. 23(1-2), pages 81-114.
    11. Kahn, James A., 1988. "Social security, liquidity, and early retirement," Journal of Public Economics, Elsevier, vol. 35(1), pages 97-117, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Iskhakov, Fedor, 2008. "Dynamic Programming Model of Health and Retirement," Memorandum 03/2008, Oslo University, Department of Economics.
    2. Paul Bingley & Gauthier Lanot, 2007. "Public Pension Programmes and the Retirement of Married Couples in Denmark," NBER Chapters, in: Public Policy and Retirement, Trans-Atlantic Public Economics Seminar (TAPES), pages 1878-1901, National Bureau of Economic Research, Inc.
    3. Alan Gustman & Thomas Steinmeier, 2008. "How Does Modeling of Retirement Decisions at the Family Level Affect Estimates of the Impact of Social Security Policies on Retirement?," Working Papers wp179, University of Michigan, Michigan Retirement Research Center.
    4. Gustman, Alan L. & Steinmeier, Thomas L., 2005. "The social security early entitlement age in a structural model of retirement and wealth," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 441-463, February.
    5. Olsson, Martin & Skogman Thoursie, Peter, 2010. "Insured by the partner?," Working Paper Series 2010:3, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    6. Michaud, P.C. & Vermeulen, F.M.P., 2004. "A Collective Retirement Model : Identification and Estimation in the Presence of Externalities," Other publications TiSEM fb0bfe30-b1e3-4b61-9bf2-1, Tilburg University, School of Economics and Management.
    7. Pierre-Carl Michaud & Susann Rohwedder, 2008. "Forecasting Labor Force Participation and Economic Resources of the Early Baby Boomers," Working Papers wp175, University of Michigan, Michigan Retirement Research Center.
    8. Laura Turner & Giovanni Gallipoli, 2011. "Social Security, Endogenous Retirement, and Intrahousehold Cooperation," 2011 Meeting Papers 935, Society for Economic Dynamics.
    9. John Laitner & Dan Silverman, 2017. "Adjusting the Payroll Tax to Promote Longer Careers," Working Papers wp363, University of Michigan, Michigan Retirement Research Center.
    10. Hanne Preter & Dorien Looy & Dimitri Mortelmans, 2015. "Retirement Timing of Dual-Earner Couples in 11 European Countries? A Comparison of Cox and Shared Frailty Models," Journal of Family and Economic Issues, Springer, vol. 36(3), pages 396-407, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lalive, Rafael & Parrotta, Pierpaolo, 2017. "How does pension eligibility affect labor supply in couples?," Labour Economics, Elsevier, vol. 46(C), pages 177-188.
    2. Blundell, R. & French, E. & Tetlow, G., 2016. "Retirement Incentives and Labor Supply," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 457-566, Elsevier.
    3. van der Klaauw, Wilbert & Wolpin, Kenneth I., 2008. "Social security and the retirement and savings behavior of low-income households," Journal of Econometrics, Elsevier, vol. 145(1-2), pages 21-42, July.
    4. Bo Honoré & Thomas Jørgensen & Áureo de Paula, 2020. "The informativeness of estimation moments," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 35(7), pages 797-813, November.
    5. Kanika Kapur & Jeannette Rogowski, 2006. "Love or Money? Health Insurance and Retirement Among Married Couples," NBER Working Papers 12273, National Bureau of Economic Research, Inc.
    6. Eric French & John Bailey Jones, 2011. "The Effects of Health Insurance and Self‐Insurance on Retirement Behavior," Econometrica, Econometric Society, vol. 79(3), pages 693-732, May.
    7. Coile Courtney, 2004. "Retirement Incentives and Couples' Retirement Decisions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-30, July.
    8. Jody Schimmel, 2006. "Men With Health Insurance and the Women Who Love Them: the Effect of a Husband's Retirement on His Wife's Health Insurance Coverage," Working Papers wp131, University of Michigan, Michigan Retirement Research Center.
    9. Eric French & Hans-Martin von Gaudecker & John Bailey Jones, 2016. "The Effect of the Affordable Care Act on the Labor Supply, Savings, and Social Security of Older Americans," Working Papers wp354, University of Michigan, Michigan Retirement Research Center.
    10. Alan L. Gustman & Thomas Steinmeier, 2009. "Integrating Retirement Models," NBER Working Papers 15607, National Bureau of Economic Research, Inc.
    11. Marco Bertoni & Giorgio Brunello, 2014. "Pappa Ante Portas: The Retired Husband Syndrome in Japan," "Marco Fanno" Working Papers 0182, Dipartimento di Scienze Economiche "Marco Fanno".
    12. Blau, David M. & Riphahn, Regina T., 1999. "Labor force transitions of older married couples in Germany," Labour Economics, Elsevier, vol. 6(2), pages 229-252, June.
    13. Benitez-Silva, Hugo & Dwyer, Debra S., 2006. "Expectation formation of older married couples and the rational expectations hypothesis," Labour Economics, Elsevier, vol. 13(2), pages 191-218, April.
    14. Bütler, Monika & Huguenin, Olivia & Teppa, Federica, 2004. "What Triggers Early Retirement? Results from Swiss Pension Funds," CEPR Discussion Papers 4394, C.E.P.R. Discussion Papers.
    15. Monika Bütler & Olivia Huguenin & Federica Teppa, 2005. "Why Forcing People to Save for Retirement May Backfire," University of St. Gallen Department of Economics working paper series 2005 2005-09, Department of Economics, University of St. Gallen.
    16. Monika Bütler & Olivia Huguenin & Federica Teppa, 2005. "Why Forcing People to Save Retirement May Backfire," Cahiers de Recherches Economiques du Département d'économie 05.05, Université de Lausanne, Faculté des HEC, Département d’économie.
    17. Michaud, Pierre-Carl, 2003. "Joint Labour Supply Dynamics of Older Couples," IZA Discussion Papers 832, Institute of Labor Economics (IZA).
    18. Gustman, Alan L. & Steinmeier, Thomas L., 2005. "The social security early entitlement age in a structural model of retirement and wealth," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 441-463, February.
    19. Bo E. Honoré & Thomas Jorgensen & Áureo de Paula, 2019. "Sensitivity of Estimation Precision to Moments with an Application to a Model of Joint Retirement Planning of Couples," CeMMAP working papers CWP36/19, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    20. Herman Kruse, 2021. "Joint Retirement in Couples: Evidence of Complementarity in Leisure," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(3), pages 995-1024, July.

    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:10305. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.