Alicia H. Munnell's research while affiliated with Boston College, USA and other places

Publications (312)

Article
Decisions made early in Social Security's history resulted in benefits in excess of contributions for early cohorts. This approach gave away the Trust Fund and the resulting interest that could have accumulated, which has increased the size of the payroll tax required to finance the program. This paper finds that, for the Old-Age and Survivors port...
Article
Full-text available
Unlike defined benefit pensions, 401(k) plans provide little guidance on how to turn accumulated assets into income. The key risk that retirees face is outliving their assets. Insurance against such risk is available through several routes, including immediate annuities, deferred annuities, and additional Social Security through delayed claiming. U...
Article
401(k) plans provide little guidance on turning accumulated assets into income. Insurance against the risk of outliving one's assets is available through immediate annuities, deferred annuities, and additional Social Security through delayed claiming. Under this Social Security bridge option, participants would tap their 401(k) for payments equal t...
Article
Historically, women in widowhood in the United States have been vulnerable, with high rates of poverty. However, over the past several decades, their poverty rate has fallen considerably. In this article, we look at why this decline occurred and whether it will continue. Using data from the Health and Retirement Study linked to Social Security admi...
Article
As retirees live longer, spend more on medical care, and get less income replaced by Social Security, many may need to consider tapping their home equity to be comfortable in retirement. The most direct way to access home equity is downsizing, but few choose this option because they generally prefer to stay in their house. The alternative is withdr...
Article
Working consistently through one's early 60s is key to retirement security. However, workers without access to retirement plans and health insurance will likely struggle to achieve such security. This paper uses the Health and Retirement Study to identify nontraditional jobs – which lack these benefits – and applies sequence analysis to explore how...
Article
Over the past two decades, the share of individuals claiming Social Security at the Early Eligibility Age has dropped and the average retirement age has increased. At the same time, Social Security rules have changed substantially, employer-sponsored retirement plans have shifted from defined benefit (DB) to defined contribution (DC), health has im...
Article
Full-text available
Many retirees in Massachusetts do not have enough income to meet their basic living expenses. Social Security will provide less to pre-retirement earnings and personal retirement savings are meager. Increasingly, retirees will need to tap their home equity to make ends meet. Many could use their home, but do not want to downsize or take out a rever...
Article
Full-text available
Very few workers save for retirement unless their employer offers them a retirement plan, typically a 401(k). But only about half of all private sector workers currently has access to such plans. In the absence of federal action to close this coverage gap, several states have stepped in. California, Connecticut, Illinois, Maryland, and Oregon have...
Article
Full-text available
Social investing is the pursuit of environmental, social, and governance (ESG) goals through investment decisions. Public pension funds have been active in this arena since the 1970s, when many divested from apartheid South Africa. They have also aimed to achieve domestic goals, such as promoting union workers, economic development, and homeownersh...
Article
The costs of state pension plans are much in the news. Generally, people lump together these un¬funded liabilities and make alarming claims that all state plans are about to go bankrupt. The evidence, though, suggests otherwise. On the other hand, look¬ing just at pension plans and just at states doesn’t give the full picture of costs facing states...
Article
Full-text available
Housing wealth, a major asset for most households entering retirement, is determined by two factors: 1) the value of the house; and 2) the amount of mortgage debt. Since 2000, house prices have been on a roller coaster, soaring to new highs during the bubble, plummeting when the bubble burst, and then beginning a gradual recovery towards their long...
Article
Full-text available
Working longer is a powerful lever to enhance retirement security. Individuals, on average, are healthier, live longer, and face less physically demanding jobs, so they should be able to extend the number of years worked. But averages are misleading when differences in health, job prospects, and life expectancy have widened between individuals with...
Working Paper
Some observers believe that investing a portion of the Social Security Trust Fund in equities would strengthen its finances and improve the program’s intergenerational risk-sharing. However, equity investments would also expose the program to greater financial risk and potentially greater political risk. Monte-Carlo simulation methods are used to i...
Working Paper
Using data from the 1992, 1998, 2004, and 2010 waves of the Health and Retirement Study (HRS), this paper compares pension participation, pension wealth, projected retirement income, and replacement rates attributable to past service, by pension type for households ages 51-56. The analysis includes workers’ pension coverage during both current and...
Article
The funded status of state and local pension plans based on the Governmental Accounting Standards Board’s traditional rules (GASB 25) increased slightly in 2015. The main reason is that, despite the poor stock market performance in 2015, returns over the last five years have been strong. Conversely, the funded status based on the new GASB 67 rules,...
Article
Full-text available
Kids are expensive. As a result, when children become financially independent, parents often have a substantial amount of extra money on hand. In this case, they have two basic choices: spend more on themselves or increase their saving for retirement. What they actually do is an open question. Answering this question is important – much of the deb...
Article
Most analyses of public pensions focus on states and cities. Less has been written about the role of counties, which are significant public service providers in some states. This brief sheds light on pension activity at the county level by documenting the costs, funded status, and unfunded liabilities to determine whether counties should regularly...
Article
At any given moment, about half of private sector workers are not covered by any sort of employer-sponsored retirement plan. This coverage gap means that many households must rely exclusively on Social Security in retirement. Since most of those without coverage work for small employers, policymakers for decades have tried to solve the problem by i...
Article
Full-text available
At any given moment, about half of private sector workers are not covered by any employer-sponsored retirement plan. To close this coverage gap, 18 states are considering retirement savings initiatives. These efforts have been spurred by the lack of action at the federal level – which would be preferable to a patch¬work of state plans – and the app...
Article
In addition to pensions, most state and local governments provide other post-employment benefits (OPEBs), the largest of which is retiree health insurance. Retiree health plans have received increased attention in recent years due to rapidly rising health costs and new reporting guidelines from the Governmental Accounting Standards Board (GASB). Th...
Article
http://www.tandfonline.com/doi/full/10.1080/05775132.2015.1138061 Few presidential candidates seem to understand the nature of the coming retirement crisis in America. It’s important to understand the many factors that are putting millions of Americans in jeopardy as they reach old age.
Article
At any given moment, only about half of private sector workers are covered by any sort of employer-sponsored retirement plan. This lack of coverage has two implications. First, a substantial share of households – roughly one-third – end up with no coverage at all during their worklives and must rely exclusively on Social Security in retirement. And...
Article
Student loan debt was $1.2 trillion in 2015, compared to just $0.2 trillion in 2003. It now accounts for more than 30 percent of total household non-mortgage debt, having surpassed credit card debt in 2011. The average student debt level for recent college students in 2013 was $31,000.1 The question is whether starting out $31,000 in the hole could...
Article
Beginning in 2015, under new provisions of the Governmental Accounting Standards Board (GASB), the unfunded actuarial accrued liability for public pension plans moved from the footnotes of financial statements to the balance sheets of employers. In addition, localities that participate in “cost-sharing” state plans are now required to report their...
Article
This paper examines the impact of the Massachusetts Health Insurance reform of 2016 on job mobility and employment exit using administrative data from the Social Security Administration. The Massachusetts reform mandated that every resident have insurance coverage and facilitated this initiative by requiring employers to offer coverage, as well as...
Article
Using Health and Retirement Study (HRS) data and Latent Class Analysis for three cohorts (those born in 1931-1936, 1937-1941, and 1942-1947), this paper explores: 1) who claims Social Security benefits at age 62; 2) what percentage of households claiming at 62 are unprepared for retirement; and 3) whether the unprepared early claimers were pushed i...
Article
The State of Connecticut administers six retirement systems. The two largest are the State Employees Retirement System (SERS) and the Teachers’ Retirement System (TRS). Over the past decade, despite a concerted effort by the State,1 the funded status for both these systems declined by about 20 percentage points and, as of 2014, stood at 42 percent...
Article
Rising Medicare costs have been a major contributor to projected long-run budget deficits, and rising out-of-pocket costs have become an increasing challenge to individuals’ retirement security. The 2010 Patient Protection and Affordable Care Act (ACA) made substantial changes to Medicare, designed both to improve the program’s finances and to redu...
Article
The State of Connecticut administers six retirement systems. The two largest are the State Employees Retirement System (SERS), and the Teachers’ Retirement System (TRS). Over the past decade, in spite of a concerted effort to fund by the State, the funded status for both these systems declined by about 20 percentage points and, as of 2014, stood at...
Article
As announced recently, Social Security will not provide a cost-of-living adjustment (COLA) in 2016. This news will prompt some to argue that using a more appropriate index of inflation for the elderly would have shown an increase in prices. These critics contend that the Consumer Price Index (CPI-W) currently used for the Social Security COLA does...
Article
The National Retirement Risk Index (NRRI) shows the share of working-age households who are at risk of being unable to maintain their pre-retirement standard of living in retirement. The Index is constructed using the Survey of Consumer Finances (SCF), a triennial survey of U.S. households that collects detailed financial and demographic informatio...
Article
Much of the disagreement over whether households are adequately prepared for retirement reflects differences in assumptions regarding the extent to which consumption declines when the kids leave home. If consumption declines substantially when the kids leave home, as some life-cycle models of retirement saving assume, households need to achieve low...
Technical Report
The Panel of expert actuaries, economists and demographers appointed by the Social Security Advisory Board is charged with providing technical assistance to the Board by reviewing the assumptions specified by the Board of Trustees of the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund and the methods used by the S...
Article
This paper explores the extent to which health, employment, family, or finances are associated with earlier-than-planned retirement using the Health and Retirement Study (HRS). The importance of any shock that drives early retirement depends both on its effect on those experiencing it and its prevalence in the population; therefore, the analysis pr...
Article
Many commentators – ourselves included – assert that people are saving less for retirement as a result of the shift from defined benefit to defined contribution plans. To support such an assertion, it would be nice to have counterfactual data showing what the world would look like today in terms of retirement saving if workers were still covered by...
Article
Full-text available
Today’s working-age households, in aggregate, will inherit a substantial amount of wealth. The effect of inheritances on retirement readiness, however, is unclear. On the one hand, past research has shown that higher-income households – who are less likely to be unprepared for retirement – are more likely to receive inheritances and to receive larg...
Article
The 2015 Social Security Trustees Report assumes that – for just the third time since the automatic adjustments were adopted in 1975 – Social Security recipients will not receive a cost-of-living-adjustment (COLA) in 2016. The reason is that the Consumer Price Index is not expected to increase in the base period used to determine the COLA. The an...
Article
The timing of the release of the Social Security Trustees Report is becoming more unpredictable. It used to come out in the spring, but in the last two years it has been released in late July. It is hard to know whether the delay reflects internal controversy or simply the inability to get six people (the Social Security Commissioner, the Secretari...
Article
This paper examines the relationship between age-related cognitive decline and three potential workplace outcomes: 1) coping with increased job difficulty; 2) shifting to a less cognitively demanding job; and 3) retiring early. It uses data from the Health and Retirement Study (HRS) and the O*NET database. Critical components of the analysis are th...
Article
The year 2014 was always going to be a pivotal one for the funded status of public pension plans because, under the old GASB 25 accounting standards, the disastrous stock market performance of 2009 rotates out of the smoothing calculations for the majority of plans that use a five-year averaging period. But 2014 also became pivotal because it was t...
Article
While dramatic increases in women’s labor supply and earnings have led to a substantial decline in the fraction of women eligible for spouse benefits at retirement, most wives still receive a survivor benefit, as wives still typically have lower earnings than their husbands and live longer. Using the MINT microsimulation model and the HRS data link...
Article
Defined benefit plans pay pension benefits from retirement until death. Thus, the longer workers live, the higher the expense for the plan. On average, states and localities assume their workers will live slightly than longer private sector workers. This brief asks a simple question: do state and local workers actually live longer on average than t...
Article
With lower Social Security replacement rates, vanishing traditional pensions, and longer lifespans, many people will need to work longer to ensure a secure retirement. Working longer directly increases current income; it avoids the actuarial reduction in Social Security benefits; it allows people to contribute more to their 401(k) plans; and it sho...
Article
Today’s workers face a brewing retirement income crisis. Economic and demographic changes have transformed the retirement landscape, systematically shifting risk and responsibility away from government and employers to individuals. As a result, about half of working-age households are “at risk” of being unable to maintain their pre-retirement stand...
Article
The fact that people are living longer is good news from a human perspective. But longer lifespans also make defined benefit pension plans more expensive because sponsors must pay benefits to retirees for a longer period of time. The question is the extent to which state and local plans have already incorporated this pattern of continued longevity...
Article
A fundamental question for retirement security is whether today’s working-age households will have adequate income to maintain their pre-retirement standard of living. Existing studies offer conflicting assessments. On the one hand, data from the Survey of Consumer Finances and studies using target income replacement rates indicate a widespread sho...
Article
After nearly a century of decline, work activity among older people began to increase in the 1980s in response to a variety of factors. The question is whether the impacts of those factors have played themselves out in recent years or whether the trend toward working longer has continued. Since working longer is the key to a secure retirement, the...
Article
401(k) plans are now the main way that private sector workers save for retirement. The balances in these accounts, together with 401(k) monies rolled over to Individual Retirement Accounts (IRAs), will soon be the primary source of retirement income other than Social Security. Yet, in 2013, the typical working household with a 401(k) approaching re...
Article
This paper summarizes what is known about leakages from existing studies and relates these results to detailed data on leakages in 2013 provided by Vanguard’s How America Saves. It then uses two data sets – the Survey of Consumer Finances (SCF) and the Survey of Income and Program Participation (SIPP) – to estimate the impact of leakages on wealth...
Article
This brief presents a new tool that describes the evolu­tion of the unfunded liability for each of the 150 plans in the Public Plans Database. The period of analysis is from 2001, when most plans were fully funded, to 2013, when virtually every plan reported significant underfunding. The goal is to identify the impact on underfunding of a few well-...
Article
Many state and local governments have responded to challenges facing their pension plans by cutting benefits. Will these cuts make it harder for state and local governments to recruit and retain high-quality workers? To date, the answer has been difficult to obtain; most micro-level datasets contain information on the existence of pensions but not...
Article
This paper explores the extent to which health, employment, family, or finances are associated with earlier-than-planned retirement using the Health and Retirement Study (HRS). The importance of any shock that drives early retirement depends both on its effect on those experiencing it and its prevalence in the population; therefore, the analysis pr...
Article
Working longer is a powerful lever to enhance retirement security. Individuals should be able to extend the number of years they work because, on average, they are healthier, live longer, and face less physically demanding jobs. But averages are misleading when discrepancies in health, job prospects, and life expectancy have widened between individ...
Article
Much of the disagreement as to whether households are adequately prepared for retirement reflects differences in assumptions regarding the extent to which consumption declines when the kids leave home. If consumption declines substantially when the kids leave home, as some life-cycle models of retirement saving assume, households need to achieve lo...
Article
The release of the Federal Reserve’s 2013 Survey of Consumer Finances (SCF) is a great opportunity to reassess Americans’ retirement preparedness as measured by the National Retirement Risk Index (NRRI). The NRRI shows the share of working-age households who are “at risk” of being unable to maintain their pre-retirement standard of living in retire...
Book
Many of today’s workers will lack the resources to retire at traditional ages and maintain their standard of living in retirement. Solving this problem is a major challenge because risk and responsibility have shifted from government and employers to individuals. Falling Short provides a vivid picture of the coming retirement crisis and provides s...
Article
Some commentators claim that retirees are better off financially than many think, partly because most retirement income from 401(k) plans and Individual Retirement Accounts (IRAs) is not captured in the Census Bureau’s widely used Current Population Survey (CPS). In response, others note that while the CPS does understate retirement income, this li...