Financial Security and Well-being in Retirement

Session Submission Type: Panel

Abstract

The United States—along with many other countries—is experiencing rapid population aging, which not only lengthens the time spent in retirement but also amplifies the importance of maintaining financial security for older households. This demographic shift makes it increasingly important to understand the determinants of financial security and broader well-being in later life, both before and after retirement. Our panel explores multiple factors that influence financial security during retirement, along with their impacts on well-being among older adults.

The first paper focuses on the role of emergency savings, identifying specific categories of spending that pose significant risks to financial stability in retiree households. Additionally, the paper highlights socioeconomic and demographic disparities in exposure to these spending shocks, shedding light on the sources of retirement‐income inequality and late‑life poverty among older Americans.

The second paper examines job loss among middle-aged workers and its economic and health consequences in retirement. Importantly, this research fills a gap in the literature by demonstrating that, although job displacement accelerates labor market exits and worsens health outcomes, retirement benefits play a crucial role in buffering these negative effects of late-career job loss.

Our attention then turns to two papers that specifically focus on the role of public policies in shaping income security and well-being in old age. The third paper examines how state policies that exclude retirement plan distributions from state income taxation may unintentionally encourage workers to retire earlier, thereby undermining the policies’ primary goal of increasing retirement savings. This research offers novel evidence indicating that such tax breaks induce early retirement and may increase poverty risks among older households. 

The final paper examines the Social Security reform that gradually increased the full retirement age, resulting in reduced Social Security retirement benefits and delayed retirement. This study highlights how these two channels can influence older adults' well-being outcomes—either reinforcing or counteracting each other—and specifically investigates the reform’s effects on a wide range of cognitive measures. The paper provides evidence that policies affecting retirement timing and benefits can also have broader implications for cognitive health in older age. 

Collectively, our panel contributes to the literature on financial security and well-being in retirement by examining the influence of household resources, labor market experiences, and public policies. The findings aim to inform policy discussions on enhancing positive outcomes for older adults and their families in the U.S. and other aging societies.

Policy Area

• Poverty and Income Policy

Chair

• Zeewan Lee, National University of Singapore

Discussants

• Lindsay Jacobs, University of Wisconsin-Madison

• Shanthi Ramnath, Federal Reserve Bank of Chicago

Organizer

• Halim Yoon, Syracuse University

Individual Presentations

• How do Financial Shocks Affect Older Adults Financial Stability - Presenting Author: Manita C Rao, University of Southern California

• The Impact of State Income Tax Breaks on Savings Behaviors and Income Security in Retirement - Presenting Author: Ngoc Dao, Kean University

• The Impact of the Increase in the Social Security’s Full Retirement Age on Cognition - Presenting Author: Halim Yoon, Syracuse University

• Retirement Benefits and the Heterogeneous Impacts of Job Loss on Older Workers - Presenting Author: Grace Beata Brang, New York University; Non-Presenting Co-Author: Sewin Chan, New York University; Non-Presenting Co-Author: Travis St.Clair, New York University