Does Retirement Kill You? Evidence from Early Retirement Windows

The magnitude of the effect that health has on the retirement decision has long been studied. We examine the reverse relationship, whether or not retirement has a direct impact on later-life health. In order to identify the causal relationship, we use unexpected early retirement window offers to instrument for retirement behavior. They are legally required to be unrelated to the baseline health of the individual, and are significant predictors of retirement. We find that there is no negative effect of early retirement on men's health, and if anything, a temporary increase in self-reported health and improvements in health of highly educated workers. While this is consistent with previous literature using Social Security ages as instruments, we also find some evidence that anticipation of retirement might also be important, and might bias the previous estimates towards zero.health, retirement, instrument, causal effect

How Can Customized Information Change Financial Plans?

Many workers nearing retirement experienced a dramatic decrease in their retirement assets when the stock market crashed in 2008. In order to maintain their expected standard of living in retirement, workers needed to work longer, save more, or do both. To measure the response of older workers to this downturn, the Center for Retirement Research at Boston College (CRR) fielded the CRR 2009 Retirement Survey on a nationally representative sample of 45-59-year-old labor force participants with relatively high pre-downturn assets. This brief is the final in a series of four based on the CRR 2009 Retirement Survey. The first brief described the Survey and highlighted the inclusion of numerous financial, employment, and behavioral factors that are omitted from other surveys. The second brief explored the relationship between these factors and worker responses to the downturn. The third brief examined how worker responses were affected when their options were made explicit – work longer, save more, or live on less in retirement. This brief explores how respondents reacted once they received information tailored to their specific situation. This brief is organized as follows. The first section provides an overview of the workers’ initial responses – work more, save more, both, or neither. The second section describes how these stated responses changed after respondents received “expert advice” that quantified the trade-off based on their specific circumstances. The third section looks at the characteristics of responders who remained committed to taking no action even after the expert advice. The fourth section assesses whether the expert advice led certain respondents to better calibrate their plans. The final section concludes that providing tailored financial advice may help some individuals improve their response to an adverse financial development.

Medicaid Crowd-Out of Private Long-Term Care Insurance Demand: Evidence from the Health and Retirement Survey

This paper provides empirical evidence of Medicaid crowd out of demand for private long-term care insurance. Using data on the near- and young-elderly in the Health and Retirement Survey, our central estimate suggests that a $10,000 decrease in the level of assets an individual can keep while qualifying for Medicaid would increase private long-term care insurance coverage by 1.1 percentage points. These estimates imply that if every state in the country moved from their current Medicaid asset eligibility requirements to the most stringent Medicaid eligibility requirements allowed by federal law – a change that would decrease average household assets protected by Medicaid by about$25,000 – demand for private long-term care insurance would rise by 2.7 percentage points. While this represents a 30 percent increase in insurance coverage relative to the baseline ownership rate of 9.1 percent, it also indicates that the vast majority of households would still find it unattractive to purchase private insurance. We discuss reasons why, even with extremely stringent eligibility requirements, Medicaid may still exert a large crowd-out effect on demand for private insurance.

Retirement Effects on Health in Europe

What are the health impacts of retirement? As talk of raising retirement ages in pensions and social security schemes continues around the world, it is important to know both the costs and benefits for the individual, as well as the governments\u27 budgets. In this paper we use the Survey of Health, Ageing and Retirement in Europe (SHARE) dataset to address this question in a multi-country setting. We use country-specific early and full retirement ages as instruments for retirement behavior. These statutory retirement ages clearly induce retirement, but are not related to an individual\u27s health. Exploiting the discontinuities in retirement behavior across countries, we find significant evidence that retirement has a health-preserving effect on overall general health. Our estimates indicate that retirement leads to a 35 percent decrease in the probability of reporting to be in fair, bad, or very bad health, and an almost one standard deviation improvement in the health index. While the self-reported health seems to be a temporary impact, the health index indicates there are long-lasting health differences

Retirement Effects on Health In Europe

What are the health impacts of retirement? As talk of raising retirement ages in pensions and social security schemes continues around the world, it is important to know both the costs and benefits or the individual as well as the governments\u27 budgets. In this paper we use the Survey of Health, Aging and Retirement in Europe (SHARE) dataset to address this question in a multi-country setting. We use country-specific early and full retirement ages as an instrument for retirement behavior in a regression discontinuity design approach. These statutory retirement ages clearly induce retirement, but are not related to an individual\u27s health. Exploiting the discontinuities in retirement behavior across countries, we find significant evidence that retirement has a health-preserving effect on overall general health. Our estimate indicates that retirement leads to a 0.35 decrease in the probability of reporting to be in fair, bad, or very bad health, and an almost 1 standard deviation drop in the health index (in the direction of better health). In addition, these results are being driven by retirement at age 65. We find no evidence of a health-preserving effect of retiring at younger ages

Do Parents Live It Up When Children Fly the Coop?

With the virtual disappearance of traditional pensions, declining Social Security replacement rates, and longer life spans, the retirement landscape is shifting dramatically. Today, responsibility for a comfortable retirement rests mostly on the individual. This change has led to widespread concern about the adequacy of household's retirement savings.

Long-term care and the elderly

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2005."September 2005."Includes bibliographical references.Long-term care expenditures represent one of the largest uninsured financial risks facing the elderly. Medicaid provides incomplete insurance against these costs: unlimited nursing home benefits with a deductible equal to the savings and income above the means-testing limits. While private insurance is available, fewer than 10 percent of the elderly are currently covered. This thesis explores how the elderly prepare for future nursing home use and the interactions between the private and public insurance systems. Chapter one exploits the state-variation in Medicaid generosity to study the financial response of the elderly to perceived future nursing home needs. I find that the elderly shift their consumption and savings decisions in response to Medicaid. Single households have lower net worth through the median of the distribution due to Medicaid policy. On the other hand, I find that married households do not lower total net worth, but they change their relative holdings of protected and non-protected assets. Chapter two explores the crowd-out effect of the public Medicaid program on demand for private long-term care insurance coverage. We estimate the impact of Medicaid program rules on private long-term care insurance coverage for the elderly. We find small but statistically significant marginal crowd-out effects.(cont.) Our estimates imply that even a $67,000 decrease in the asset disregard for couples would only increase private long-term care insurance ownership among the elderly by 1.9 percentage points. These findings underscore that marginal reforms to the existing Medicaid program are unlikely to be an effective way of increasing private long-term care insurance coverage among the elderly. Chapter three explores individuals' expectations for future nursing home use. I compare self-reported probabilities to the statistical probability computed with a state-of-the-art model used by the long-term care insurance industry. I find that respondents tend to overestimate unlikely outcomes and underestimate likely outcomes. On average, though, the expectations are very accurate. I find that expectations for nursing home use evolve with health conditions in similar ways as the statistical probability. While I find that expectations include private information, they do not account for all information available to the individual, especially the individual's demographic characteristics.by Norma B. Coe.Ph.D

A Comprehensive Measure of the Costs of Caring For a Parent: Differences According to Functional Status

Providing unpaid care for an older parent has costs that go well beyond a caregiver’s lost wages. A new estimate suggests that the median direct and indirect costs of caregiving are $180,000 over two years, about the same as full-time institutional care. This estimate accounts for lost earnings as well as non-tangible factors, such as lost leisure time and changes to the caregiver’s well-being. It suggests that informal care cost caregivers at least$277 billion in 2011, which is 20 percent higher than estimates that only consider lost wages

2SLS Versus 2SRI: Appropriate Methods for Rare Outcomes and/or Rare Exposures

This study used Monte Carlo simulations to examine the ability of the two-stage least squares (2SLS) estimator and two-stage residual inclusion (2SRI) estimators with varying forms of residuals to estimate the local average and population average treatment effect parameters in models with binary outcome, endogenous binary treatment, and single binary instrument. The rarity of the outcome and the treatment was varied across simulation scenarios. Results showed that 2SLS generated consistent estimates of the local average treatment effects (LATE) and biased estimates of the average treatment effects (ATE) across all scenarios. 2SRI approaches, in general, produced biased estimates of both LATE and ATE under all scenarios. 2SRI using generalized residuals minimized the bias in ATE estimates. Use of 2SLS and 2SRI is illustrated in an empirical application estimating the effects of long-term care insurance on a variety of binary health care utilization outcomes among the near-elderly using the Health and Retirement Study