Urban InstituteRetirement Policy Center

Briefs: Older Americans' Economic Security

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Lifetime Benefits and Taxes in Social Security: The Effect of Different Discount Rates on Present Value Calculations (Series/Older Americans' Economic Security)
Stephanie Rennane, C. Eugene Steuerle

It is often useful to compute contributions and benefits over a lifetime when studying policies for retirement and Social Security. However, these calculations are complicated by factors like economic growth and inflation, which change the relative value of investments over time. The fact that $1 in the bank today might accrue enough interest to be worth $1.03 next year leads economists, accountants, and actuaries to find ways to equate the two amounts at a point in time. This fact sheet explains how the discount rate affects present value calculations.

Posted: February 22, 2011Availability: HTML | PDF

Can Unemployed Older Workers Find Work? (Series/Older Americans' Economic Security)
Richard W. Johnson, Janice Park

Job loss during the Great Recession is upending retirement savings plans for many older workers. Fewer than a quarter of workers age 50 and older who lost their jobs between mid-2008 and the end of 2009 found work within 12 months, much lower than the reemployment rate for younger workers. Older displaced workers who find jobs must often accept deep pay cuts. These challenges highlight the need for more training and employment services for those 50 and older.

Posted: January 12, 2011Availability: HTML | PDF

How Quickly Do Older Adults Spend Their Wealth? (Policy Briefs/Retirement Project Brief Series)
Rudolph G. Penner, Karen E. Smith

Although the shift from defined benefit pension plans to defined contribution plans raises concerns that some retirees may outlive their assets, most spend their wealth cautiously. High income retirees continue to accumulate wealth until age 85. Net worth for middle-income retirees begins declining after age 70, but only very slowly. Low-income retirees never accumulate much wealth and spend their limited assets quickly, however, leaving most dependent on Social Security.

Posted: April 22, 2010Availability: HTML | PDF

Disability Just Before Retirement Often Leads to Poverty (Policy Briefs)
Richard W. Johnson, Melissa M. Favreault, Corina Mommaerts

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.

Posted: January 15, 2010Availability: HTML | PDF

Delaying Retirement an Additional Year Could Offset Stock Market Losses (Series/Older Americans' Economic Security)
Barbara Butrica, Karen E. Smith, Eric Toder

The sharp decline in the stock market in 2008 placed the retirement security of many Americans at risk. Although the market has rebounded this year after bottoming out in March 2009, as of mid-October 2009 the S&P 500 Index remained 30 percent below its peak level two years earlier. This brief simulates the impact of the 2008 stock market crash on future retirement savings under alternative scenarios. The results show that by delaying retirement one additional year, many mid- and late-career workers could increase their income at age 67 enough to offset some or all of their stock market losses.

Posted: January 14, 2010Availability: HTML | PDF

Does Autoenrollment Affect Employer Contributions? (Series/Older Americans' Economic Security)
Barbara Butrica, Mauricio Soto

Automatic enrollment, a 401(k) feature that enrolls employees as soon as they become eligible, is growing in popularity because it has been shown to significantly increase pension participation rates. However, higher participation rates increase costs for employers that match employee contributions. This brief evaluates the extent to which firms adjust their 401(k) contributions to offset the higher costs associated with automatic enrollment. We find that employer match rates are 7 percentage points lower among firms with autoenrollment than among those without it, suggesting that automatic enrollment may not promote retirement savings as effectively as some advocates have claimed.

Posted: December 16, 2009Availability: HTML | PDF

How Will the Stock Market Collapse Affect Retirement Incomes? (Series/Older Americans' Economic Security)
Barbara Butrica, Karen E. Smith, Eric Toder

Urban Institute projections suggest the stock market collapse will have small effects on most Americans' retirement incomes. It's estimated that 37 percent of Americans born between 1941 and 1965 owned no stocks when the market crashed in 2008 and that income from assets will account for a small share of retirement income, even for those with stocks. For most retirees, Social Security provides the majority of income. Had Social Security been invested in private accounts with equities, the impact of the crash would have been much larger—positive or negative, depending on one's birth cohort and on future market performance.

Posted: June 24, 2009Availability: HTML | PDF

How Do Disabilities Affect Future Retirement Benefits? (Series/Older Americans' Economic Security)
Richard W. Johnson, Gordon Mermin

One-quarter of workers ages 51 to 55 develop work disabilities before age 62. Disabilities often force people to curtail their work hours, derailing retirement preparations. However, protections built into Social Security, including disability and spouse benefits and the system's tilt toward workers with low lifetime earnings, cushion the impact of midlife health problems. After other factors are controlled for, the onset of health-related work limitations between ages 51 and 61 reduces Social Security retirement benefits at ages 63 to 67 by only about 2 percent, much less than the impact on other retirement savings.

Posted: October 23, 2008Availability: HTML | PDF

Are Low-Wage Workers Destined for Low Income at Retirement? (Series/Older Americans' Economic Security)
Barbara Butrica, Eric Toder

Low-wage workers find it difficult to save for retirement. Without savings, they will have to rely on Social Security and pensions. Yet these income sources are based on earnings, which means that low-wage workers will have lower Social Security and pension benefits than higher-wage workers. This brief assesses whether boomers with low earnings between ages 22 and 62 are destined for low income at age 67. We find that nearly two-thirds of this group will end up with low income at retirement, but more than one-third will manage to defy the odds and escape being among the lowest-income older Americans.

Posted: September 26, 2008Availability: HTML | PDF

Will Changing Job Demands Boost Older Workers' Prospects? (Series/Older Americans' Economic Security)
Richard W. Johnson, Gordon Mermin

Employment is now less physically demanding and less likely to entail difficult working conditions than before, a trend that might spur employment at older ages. However, the shift to a knowledge-based economy has increased cognitive demands and placed a premium on mastering the latest technical skills. Between 1971 and 2006 the share of workers in cognitively demanding jobs (requiring such skills as reasoning, writing, and decisionmaking) increased from 25.7 to 34.8 percent. This development may curtail opportunities for older workers with limited education or those who lack recent training.

Posted: September 26, 2008Availability: HTML | PDF

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