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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. "

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 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 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 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: 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]

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 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.