Working Paper: NBER ID: w31532
Authors: Edward N. Wolff
Abstract: Retirement income security refers to the ability of households to provide an adequate stream of income during the period of their retirement from the labor force. Expected retirement income is based of four components: (i) standard non-pension wealth holdings, (ii) defined contribution (DC) pension holdings, (iii) actual or expected defined benefit (DB) pension entitlements, and (iv) actual or expected Social Security benefits. The first two components are converted into an annuity. All the data (except rates of return) for these calculations are available from the Survey of Consumer Finances. Results indicate that both Black and Hispanic households made remarkable progress in terms of mean and median retirement income, poverty reduction, and replacement rates from 1989 to 2007 in both absolute terms and relative to whites. However, for Black households, this was followed by a reversal of fortune from 2007 to 2019, with expected median retirement income declining, the projected poverty rate rising, and the projected replacement rate falling, though expected mean retirement income does rise. Hispanics also experienced a setback in mean retirement income but continued progress in replacement rates and reducing poverty from 2007 to 2019.
Keywords: No keywords provided
JEL Codes: D31; J15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| changes in retirement savings (D14) | poverty rates (I32) |
| changes in retirement savings (D14) | replacement rates (H55) |
| economic downturns or policy changes (F44) | Black households' retirement security (D14) |
| savings behaviors (D14) | retirement preparedness for Black and Hispanic households (J26) |
| expected mean retirement income for Black and Hispanic households (J26) | systemic inequalities in wealth accumulation (D31) |
| economic conditions and policy shifts (E65) | changes in retirement preparedness (J26) |