An important line of recent research has explored the impact of pension knowledge, financial literacy, and financial education on saving and retirement behavior. Part of the motivation for this research is the continuing debate about whether American households are saving adequately for retirement. Most studies in this literature use the Health and Retirement Study (HRS). In all of these studies, the pension measures based on the employer-provided data were calculated using the Pension Estimation Program written by researchers at the University of Michigan for the HRS. However, the Pension Estimation Program tends to overestimates pension wealth, leading researchers to conclude that older workers are more adequately prepared for retirement than is actually the case.
This project aims to use a newly developed and more accurate defined-contribution (DC) pension wealth calculator to generate new estimates of DC and total pension wealth for individuals in the HRS. The project also aims to use these new, more accurate pension wealth estimates to explore the sensitivity of previous estimates of the impact of pension knowledge on retirement and saving behavior.
Potential Implications of the Study: The findings of this study will help us understand individuals' retirement income adequacy, pension knowledge, the timing of labor force withdrawal.
