Retirement and Older Americans

Publications on Retirement and Older Americans

How employers respond to automatic pension enrollment is important to the debate over how to increase retirement savings for all Americans. We recently completed a study showing that employers with autoenrollment have lower match rates than those without it, suggesting that employers may be trying to offset their higher costs. In contrast, the Employee Benefit Research Institute finds that employers with automatic enrollment have increased match rates since 2005. The two studies measure different concepts and use different time frames. A large sample of 401(k) plans reporting match rates before and after autoenrollment is needed to fully understand employer responses.

Institute Fellow Rudy Penner describes how the U.S. budget is prepared by the executive branch and Congress, and how it then is implemented by the executive branch. The budget preparation process could be improved, Penner asserts, but budget implementation works smoothly and efficiently. The severe long-run budget problem the country faces is caused by only three spending programs: Social Security, Medicare, and Medicaid. All are growing faster than the economy, and there is strong opposition against raising tax burdens. Changes are suggested for the budget process so that it is better suited for dealing with this long-run problem.

We use the Health and Retirement Study to investigate household assets at older ages. We find a notable increase in the net worth of older households between 1998 and 2006, with most of the growth due to housing. The age pattern of asset accumulation and decumulation varies considerably by income. High-income seniors increase assets at older ages. Middle-income seniors reduce assets in retirement, but at a rate that will not deplete assets within their expected life. Low-income seniors spend their financial assets at a rate that will mostly deplete them, leaving only Social Security and defined-benefit pensions at older ages.

Questions persist about how well Social Security Disability Insurance, workers' compensation, Supplemental Security Income, and veterans' benefits protect people who are unable to work. This study examines disability benefit receipt, income, and poverty status for a sample of Americans as they age. The results underscore the precarious financial state of most people approaching traditional retirement age with disabilities. Fewer than half of people who meet our disability criteria ever receive disability benefits in their fifties or early sixties. Poverty rates for those who do are more than three times as high after benefit receipt than before disability onset.

A patchwork of public programs, including Social Security Disability Insurance, workers’ compensation, Supplemental Security Income, and veterans’ benefits, provides income supports to people with health problems who are unable to work. Yet, many Americans who develop disabilities in their fifties or early sixties fall into poverty. With millions of boomers entering their sixties—when work disability rates peak—it’s time to fix the social insurance safety net for disabled workers.