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on Economics of Ageing |
| By: | Robert L. Brown |
| Abstract: | This paper has been written to bring up to date materials in a monograph that was a part of the Butterworths series of monographs in social gerontology, in particular, the 1991 monograph entitled: Economic Security in an Aging Population (Brown, 1991). The paper reports on research that indicates that today’s retirees are doing very well in terms of their replacement ratios and that Canadian poverty rates among the elderly are low relative to OECD (Organization for Economic Co-operation and Development) countries. Government-sponsored plans have been strengthened either through explicit expansion (e.g., the Guaranteed Income Supplement (GIS)) or through the reform of the Canada/Quebec Pension Plans (C/QPP). Also important is the maturation of Employer-sponsored pension plans. However, for the latter, coverage rates are down. This has created concern that future generations of Canadian retirees may not be able to experience the standard of living that is the reality for today’s elderly. The paper concludes that the aging of the population is not the cause of the increased cost of health care and social security today. Even by 2031, when the entire baby boom will be aged 65+, the impact of population aging on costs will be manageable. The paper also discusses the affordability of these systems if the normal age at retirement were to rise. |
| Keywords: | Baby boom, old age security, Canada/Quebec pension plans, registered pension plans, registered retirement savings plans, health care cost |
| JEL: | J18 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:sedapp:285&r=age |
| By: | Doblhammer, Gabriele (University of Rostock); van den Berg, Gerard J. (IFAU - Institute for Labour Market Policy Evaluation); Fritze, Thomas (German Center for Neurodegenerative Diseases (DZNE)) |
| Abstract: | With ageing populations and a stronger reliance on individual financial decision-making concerning asset portfolios, retirement schemes, pensions and insurances, it becomes increasingly important to understand the determinants of cognitive ability among the elderly. To study effects of the early-life economic environment, macro-economic fluctuations may be used. In European countries, about three to four economic recession and boom periods occurred between 1900 and 1945. The timing of these periods differs across countries. <p> We apply data from the Survey of Health, Aging and Retirement in Europe (SHARE) among elderly individuals. This survey is homogeneous across countries. We use almost 20,000 respondents from 11 countries. We examine several domains of cognitive functioning at ages 60+ and link them to the macro-economic deviations in the year of birth, controlling for demographic, socioeconomic and health status. We find that economic conditions at birth significantly influence cognitive functioning late in life in various domains. The effects are particularly pronounced among the less educated. Recessions negatively influence numeracy and verbal fluency as well as the score on the omnibus cognitive indicator. The results are robust; controlling for current characteristics does not change effect sizes and significance. We discuss possible causal pathways. |
| Keywords: | Cognition; economic business cycle; developmental origins; health; long-run effects; dementia; numeracy; memory; decision-making |
| JEL: | I12 I18 J14 J26 N14 N34 |
| Date: | 2011–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2011_014&r=age |
| By: | Monika Butler; Kim Peijnenburg; Stefan Staubli |
| Abstract: | We analyze the effect of means-tested benefits on annuitization decisions. Most industrialized countries provide a subsistence level consumption floor in old age, usually in the form of means-tested benefits. The availability of such means-tested payments creates an incentive to cash out (occupational) pension wealth for low and middle income earners, instead of taking the annuity. Agents trade-off the advantages from annuitization, receiving the wealth-enhancing mortality credit, to the disadvantages, giving up “free” wealth in the form of means-tested supplemental benefits. We find that the availability of means-tested benefits can reduce the desired annuitization levels substantially. Using individual level data, we show that the model’s predicted annuitization rates as a function of the level of pension wealth are roughly consistent with the cash-out patterns of occupational pension wealth observed in Switzerland. |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:igi:igierp:418&r=age |
| By: | Vasily Kartashov; Raimond Maurer; Olivia S. Mitchell; Ralph Rogalla |
| Abstract: | This paper assesses the impact of variable investment-linked deferred annuities (VILDAs) on lifecycle consumption, saving, and portfolio allocation patterns given stochastic and systematic mortality. Insurers have taken two approaches to manage systematic mortality risks, namely self-insurance and risk transfer to purchasers of the annuity products. We demonstrate that self-insurance leads to high loadings, so that households offered a choice would favor the risk transfer scheme. Reservation loadings on the actuarially fair VILDA price for non-participation are 0.5-8%; if insurers cannot hedge within this range, they will transfer systematic longevity risks to the annuitants. Our findings have implications for new payout products that may be attractive to older households seeking to protect against retirement shortfalls. |
| JEL: | G11 G2 G22 G23 H55 I3 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:17505&r=age |