Working Paper: NBER ID: w16211
Authors: Gopi Shah Goda; John B. Shoven; Sita Nataraj Slavov
Abstract: Media reports predicted that the stock market decline in October 2008 would cause changes in retirement intentions, due to declines in retirement assets. We use panel data from the Health and Retirement Study to investigate the relationship between stock market performance and retirement intentions during 1998-2008, a period that includes the recent crisis. While we find a weak negative correlation between stock returns and retirement intentions, further investigation suggests that this relationship is not driven by wealth shocks brought about by stock market fluctuations, but by other factors that are correlated with both the stock market and retirement intentions.
Keywords: stock market; retirement intentions; wealth shocks; labor supply
JEL Codes: J14; J26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| S&P 500 index (G12) | retirement intentions (J26) |
| S&P 500 index declines (G12) | increase in intentions to delay retirement (J26) |
| stock market performance (G10) | expectations about financial readiness for retirement (D14) |
| expectations about financial readiness for retirement (D14) | labor supply decisions (J22) |
| stock market performance (G10) | probability of working past retirement age (J26) |
| stock market performance (G10) | expected retirement age (J26) |
| greater exposure to stock market fluctuations (G11) | stronger responses in retirement intentions (J26) |
| wealth shocks from stock market volatility (G17) | changes in retirement intentions (J26) |
| shifts in risk perception and economic outlook (E66) | relationship between stock market performance and retirement intentions (J26) |