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2010 University of Michigan Retirement Research Center Conference Papers

'Retirement, Planning, and Social Security in Interesting Times.

Research Halted at University Retirement Centers After Social Security Funding Cuts

"[The] University of Michigan ... has not received any additional funding following the Social Security Administration's February cuts ... [T]he New York Retirement and Disability Research Center, based at Baruch College in partnership with Hunter College and The New School, received a termination notice from the Social Security Administration on February 20, 2025 ... The center at the University of Wisconsin-Madison closed its doors earlier this month, as did the center operated by the National Bureau of Economic Research Retirement and Disability Research Center.... Though Boston College's Center for Retirement Research was also affected by the cuts ... the university's research center has received additional funding and remains in operation. "

University of Michigan Retirement Payments Dwarf Private-Sector Plans

The University of Michigan contributed $217.9 million to its employees' retirement plans in 2010. The school's retirement plan matches up to 10 percent of employee pay.

Michigan Governor Proposes Universal FMLA

"As outlined in the proposed legislation, the measure would: [1] Cover companies with 50 or more employees. [2] Permit all qualified workers to take up to 15 weeks of paid intermittent from work to care for themselves or their families. [3] Provide up to 65 percent of a worker's pay. [4] Be funded by a payroll tax on employers."

Memo from Pension Rights Center to Saint Peter's University Hospital Retirement Plan Participants About IRS Church Plan Ruling (PDF)

"Beyond the technicalities, the IRS's private letter ruling allows Saint Peter's to break the promise of guaranteed pensions that it repeatedly made to you throughout your work lives. As far as we are able to tell, the only reason for the ruling is that IRS officials do not want to admit that the agency has been misreading the law for many years.... [A] Saint Peter's retiree has filed a lawsuit in the New Jersey federal district court. The correctness of the IRS ruling, as well as other issues, will be addressed in that proceeding."

Research Project: The Social Security Early Retirement Benefit as Safety Net (PDF)

Excerpt: This project will use the Health and Retirement Study to examine the health and economic status of those who collect Social Security early retirement benefits and will predict their behavioral reaction to an increase in the Early Entitlement Age or a change in the Full Retirement Age that reduces the value of the early retirement benefit. We would use a propensity score reweighting method to estimate who uses early retirement benefits as a safety net against deteriorating health and who might be induced to apply for disability benefits or retire without income replacement if the generosity or availability of early retirement benefits were reduced. [UM10-02]

Research Project: The Effect of Out-of-Pocket Spending for Health Care on Economic Preparation for Retirement

Excerpt: In research previously funded by the Social Security Administration through MRRC, we estimated the fraction of households aged 65-69 who were adequately prepared for retirement by finding whether their economic resources could sustain an empirically estimated life-cycle consumption path. The only source of uncertainty in the model was longevity. The level of spending by each household was affected by average spending on health care but not by health spending shocks. In the proposed research, we will explicitly take into account the risk of out-of-pocket spending on health care to find, via simulation, the fraction of households financially prepared for retirement. [UM10-18]

Research Brief: Changes in Consumption and Activities in Retirement (PDF)

2 pages. Excerpt: Economists have used the term retirement-consumption puzzle to refer to the finding that individuals seem to reach retirement not adequately prepared and appear to reduce spending in response. Following workers over time, this study shows that fewer than half of those who retire recollect a spending decline at retirement. Actual spending change also does not decline at retirement.

Research Project: Post-Retirement Adjustments in Defined Benefit Pensions

Excerpt: Few private defined benefit pension plans index benefits after a worker begins receiving them. Previous (now dated) research finds that most plans do, nonetheless, make 'voluntary' adjustments, which compensate for roughly 40% of the price increases after retirement. This project will measure actual adjustments experienced by HRS respondents, and relate them to inflation, institutional factors suggested by past research (collective bargaining, government sector), and changes in the financial conditions of the industries providing the benefits. We will examine the implication of these findings for our understanding of the adequacy of pension benefits as individuals age and for between-group differences in pension wealth. [UM10-17]

Social Security in a Changing Environment: Findings from the Retirement Research Center at the National Bureau of Economic Research

Excerpt: Since September 2003, the Retirement Research Center at the National Bureau of Economic Research has conducted a coordinated series of investigations on Social Security in a changing environment and the potential routes to sustainable solvency. The Center supports extensive collaborative research over a multiyear horizon to achieve a more fully integrated understanding of Social Security's challenges and the changing environment in which it operates. This article is an overview of the studies completed since the Center's inception.

Research Project: The Effects of the Economic Crisis on Retirement and Spending

Excerpt: The United States is experiencing the greatest economic crisis since the Great Depression. Housing prices have declined, leaving many with negative equity; falling stock values have substantially reduced household net worth; high and increasing rates of job loss jeopardize the economic foundations of many families. Little is known about how these different effects are distributed in the population, and even less is known about how households and individuals adjust in the domains of actual and anticipated retirement and spending. We propose to assess, quantitatively, the effects of the economic crisis, both gross and net of household behavioral responses. [UM10-06]

Research Brief: Why Not Retire? The Time and Timing Costs of Market Work (PDF)

2 pages. Excerpt: Overall, the results suggest that market work imposes significant constraints on those who choose it, constraints that increase the incentives for complete retirement rather than a gradual reduction in market hours as people become eligible for public and/or private pensions.

Munnell, Center for Retirement Research Change Tune on 401(k)s

"The country-wide shift from defined benefit plans to defined contribution plans is not resulting in less accumulation of retirement assets, according to a new paper from the Center for Retirement Research at Boston College. That conclusion directly contradicts the retirement think tank's long-standing thesis -- that the nation has become less prepared for retirement as more workers have been moved into 401(k) plans. The Center and its director, Alicia Munnell, have been producing data for years showing that the shift to 401(k) plans was resulting in less retirement savings. Munnell was the lead author of the most recent report."

Center for Retirement Research at Boston College Begins Email Newsletter

Excerpt: WELCOME to the first edition of the Center for Retirement Research newsletter. The newsletter will provide a quick and easy way to stay on top of our latest research findings and activities. We hope you find it both insightful and lively. -- Alicia H. Munnell, Director' Subscription form is at http://www.netcasters.com/cgi-bin/crr/contact.pl (link is in lower right-hand corner of the newsletter)

The Research Contributions of the Center for Retirement Research at Boston College (PDF)

Excerpt: This article reviews the CRR's research contributions over its 10-year history and their implications for Social Security and retirement income policy in three major areas: (1) Social Security's long-term financing shortfall, (2) the adequacy of retirement incomes, and (3) labor force participation at older ages as a means to improve retirement income security.

Research Details: Efficiency Gains and Social Security Reform

Excerpt: This project has two parts. First, it proposes to generalize existing retirement models to include health and employer constraints as well as worker choice. Second, it proposes to present and analyze a Social Security reform designed to promote efficiency.

Research Details: Designing Optimal Pension Payouts Using Life Annuities and Phased Withdrawals (PDF)

Excerpt: This research project will evaluate the key risk and return trade-offs of alternative ways of handling the payout phase of a defined contribution or Social Security personal account. This project will compare these outcomes for a life annuity versus a phased withdrawal.

Research Project Abstract: Private Pensions and Decisions of When to Retire

Excerpt: This research would shed light on two key labor-supply questions, namely, the effect on retirement of recent declines in DB pension plans and the cross-sectional effect on retirement of differences in late-in-career earning trajectories.

Research Project Abstract: Economic Resources in Retirement and Returns-to-Scale in Consumption

Excerpt: Most assessments of the adequacy of retirement resources are expressed as a comparison of pre-retirement income to post-retirement income. Yet, among couples a substantial fraction of retirement years is spent by the surviving spouse living alone. To the extent that singles need less than couples to maintain the same standard of living, assessments of the adequacy of economic resources that make no adjustment for widowing will systematically mis-state economic preparation.

Research Project: Should You Borrow from Yourself? The Determinants and Effects of 401(k) Loans

Excerpt: This project proposes to evaluate the economic rationale for 401(k) plan loans and the empirical determinants of loan patterns. We will show how plan design and participant characteristics contribute to borrowing from one's pension, as well as default and repayment behavior. This research will be useful to employers in developing plan design, and also to employees seeking to enhance their retirement preparedness. [UM10-10]