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<h1 itemprop="headline">The Disappearing Defined Benefit Pension and Its Potential Impact on the Retirement Incomes of Baby Boomers</h1>
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<div id="hByline">by <span itemprop="author">Barbara A. Butrica, Howard M. Iams, Karen E. Smith, and Eric J. Toder</span><br>Social Security Bulletin, <abbr title="Volume">Vol.</abbr> 69, <abbr title="Number">No.</abbr> 3, 2009 (released October 2009)</div>
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<p id="synopsis" itemprop="description">This article uses a microsimulation model to estimate how freezing all remaining private-sector and <span class="nobr">one-third</span> of all public-sector defined benefit (<abbr class="spell">DB</abbr>) pension plans over the next 5 years would affect retirement incomes of baby boomers. If frozen plans were supplemented with new or enhanced defined contribution (<abbr class="spell">DC</abbr>) retirement plans, there would be more losers than winners, and average family incomes would decline. The decline in family income would be much larger for <span class="nobr">last-wave</span> boomers born from 1961 through 1965 than for those born from 1946 through 1950, because younger boomers are more likely to have their <abbr class="spell">DB</abbr> pensions frozen with relatively little job tenure. Higher <abbr class="spell">DC</abbr> accruals would raise retirement incomes for some families by more than their lost <abbr class="spell">DB</abbr> benefits. But about 26 percent of <span class="nobr">last-wave</span> boomers would have lower family incomes at age 67, and only 11 percent would see their income increase.</p>
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<hr />
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<div class="eightypercent">
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<p>Howard M. Iams is a senior research advisor with the Office of Research, Evaluation, and Statistics, Office of Retirement and Disability Policy, Social Security Administration (<abbr class="spell">SSA</abbr>). Barbara A. Butrica, Karen E. Smith, and Eric J. Toder are senior research associates at the Urban Institute—a nonprofit, nonpartisan policy research and educational organization—which examines the social, economic, and governance problems facing the nation. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.<br>The research reported herein was supported by the Center for Retirement Research at Boston College pursuant to a grant from <abbr class="spell">SSA</abbr>, funded as part of the Retirement Research Consortium.</p>
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<p><i>Acknowledgments</i>: The authors gratefully acknowledge the expert team of researchers that have developed <abbr>MINT</abbr> over the past decade. This team includes, but is not limited to, Karen Smith, Eric Toder, Melissa Favreault, Gary Burtless, Stan Panis, Caroline Ratcliffe, Doug Wissoker, Cori Uccello, Tim Waidmann, Jon Bakija, Jillian Berk, David Cashin, Matthew Resseger, and Katherine Michelmore.</p>
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<p>Contents of this publication are <a href="/policy/accessibility.html">not copyrighted</a>; any items may be reprinted, but citation of the <i>Social Security Bulletin</i> as the source is requested. The findings and conclusions presented in the <i>Bulletin</i> are those of the authors and do not necessarily represent the views of the Social Security Administration.</p>
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</div>
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</div>
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<h2>Introduction</h2>
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<div class="abbrtable">
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<table role="presentation">
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<caption>Selected Abbreviations</caption>
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<tr>
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<td><abbr class="spell">CB</abbr></td>
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<td>cash balance</td>
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</tr>
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<tr>
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<td><abbr>COLA</abbr></td>
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<td>cost-of-living adjustment</td>
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</tr>
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<tr>
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<td><abbr class="spell">DB</abbr></td>
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<td>defined benefit</td>
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</tr>
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<tr>
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<td><abbr class="spell">DC</abbr></td>
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<td>defined contribution</td>
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</tr>
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<tr>
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<td><abbr class="spell">DI</abbr></td>
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<td>Disability Insurance</td>
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</tr>
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<tr>
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<td><abbr>MINT</abbr></td>
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<td>Modeling Income in the Near Term</td>
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</tr>
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<tr>
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<td><abbr class="spell">PBGC</abbr></td>
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<td>Pension Benefit Guaranty Corporation</td>
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</tr>
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<tr>
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<td><abbr>PIMS</abbr></td>
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<td>Pension Insurance Modeling System</td>
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</tr>
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<tr>
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<td><abbr>SIPP</abbr></td>
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<td>Survey of Income and Program Participation</td>
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</tr>
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<tr>
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<td><abbr class="spell">SOI</abbr></td>
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<td>Statistics of Income</td>
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</tr>
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<tr>
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<td><abbr class="spell">SSA</abbr></td>
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<td>Social Security Administration</td>
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</tr>
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<tr>
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<td><abbr class="spell">SSI</abbr></td>
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<td>Supplemental Security Income</td>
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</tr>
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<tr>
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<td><abbr>U.K.</abbr></td>
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<td>United Kingdom</td>
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</tr>
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</table>
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</div>
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<p>The percentage of workers covered by a traditional defined benefit (<abbr class="spell">DB</abbr>) pension plan that pays a lifetime annuity, often based on years of service and final salary, has been steadily declining over the past 25 years. From 1980 through 2008, the proportion of private wage and salary workers participating in <abbr class="spell">DB</abbr> pension plans fell from 38 percent to 20 percent (Bureau of Labor Statistics 2008; Department of Labor 2002). In contrast, the percentage of workers covered by a defined contribution (<abbr class="spell">DC</abbr>) pension plan—that is, an investment account established and often subsidized by employers, but owned and controlled by employees—has been increasing over time. From 1980 through 2008, the proportion of private wage and salary workers participating in only <abbr class="spell">DC</abbr> pension plans increased from 8 percent to 31 percent (Bureau of Labor Statistics 2008; Department of Labor 2002). More recently, many employers have frozen their <abbr class="spell">DB</abbr> plans (Government Accountability Office 2008; Munnell and others 2006). Some experts expect that most private-sector plans will be frozen in the next few years and eventually terminated (Aglira 2006; Gebhardtsbauer 2006; McKinsey & Company 2007). Under the typical <abbr class="spell">DB</abbr> plan freeze, current participants will receive retirement benefits based on their accruals up to the date of the freeze, but will not accumulate any additional benefits; new employees will not be covered. Instead, employers will either establish new <abbr class="spell">DC</abbr> plans or increase contributions to existing <abbr class="spell">DC</abbr> plans.</p>
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<p>These trends threaten to shake up the American retirement system as we know it because of vast differences between <abbr class="spell">DB</abbr> and <abbr class="spell">DC</abbr> pension plans, including differences in coverage rates within a firm, timing of accruals, investment and labor market risks, forms of payout, and effects on work incentives and labor mobility. <abbr class="spell">DB</abbr> pensions are tied to employers who, consequently, bear the responsibility for ensuring that employees receive pension benefits. In contrast, <abbr class="spell">DC</abbr> retirement assets are owned by employees who, therefore, bear the responsibility for their own financial security.</p>
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<p>This article simulates how the shift from <abbr class="spell">DB</abbr> to <abbr class="spell">DC</abbr> pensions might affect the distribution of retirement income among boomers under two different pension scenarios: one that maintains current <abbr class="spell">DB</abbr> pensions, and one that freezes all remaining <abbr class="spell">DB</abbr> plans in addition to a third of all state and local plans over the next 5 years. The analysis uses the Social Security Administration's (<abbr class="spell">SSA</abbr>'s) Modeling Income in the Near Term (<abbr>MINT</abbr>) microsimulation model to describe the potential impact of the pension shift on boomers at age 67. The article examines both changes in retirement income and the numbers of winners and losers, and it compares these outcomes among individuals grouped by sex, educational attainment, marital status, race/ethnicity, years of paid employment, and quintiles of lifetime earnings and retirement income. Of principal concern is whether income from increased <abbr class="spell">DC</abbr> plan coverage will compensate for the loss of <abbr class="spell">DB</abbr> plan benefits.</p>
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<h2>Background</h2>
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<p>There are two general types of pensions: <abbr class="spell">DC</abbr> plans and traditional <abbr class="spell">DB</abbr> plans. In <abbr class="spell">DC</abbr> plans—which include <span class="nobr">401(k)</span> plans—employers, employees, or both employers and employees make tax-deferred contributions to a retirement account in the employee's name. The contribution amount can be set either as a particular share of salary or a given dollar amount. At retirement, workers receive the funds that have accumulated in their accounts, generally as <span class="nobr">lump-sum</span> distributions (Johnson, Burman, and Kobes 2004), although they can also use the proceeds to purchase annuities in the marketplace.</p>
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<p>Traditional <abbr class="spell">DB</abbr> plans provide workers with guaranteed lifetime annuities that begin at retirement and promise benefits that are typically expressed as a multiple of years of service and earnings received near the end of one's career (for example, 1 percent of average salary received during the final 3 years on the job, multiplied by the number of years of service). Plan participants cannot collect benefits until reaching the plan's retirement age, which varies among employers. Some plans allow workers to collect reduced benefits at specified early retirement ages.</p>
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<p>The value of future retirement benefits from <abbr class="spell">DC</abbr> plans increases each year by the value of employee and employer contributions to the plan plus any investment returns earned on the account balance. As long as market returns are relatively stable and participants and their employers contribute consistently over time, account balances will increase steadily each year until retirement. Because equity returns are volatile in the long run as well as the short run (Stambaugh 2009), the expected income from <abbr class="spell">DC</abbr> retirement accounts of those reaching retirement age can vary greatly over different time periods (Burtless 2009). But the plans themselves are not designed to produce age-varying growth rates.<sup><a href="#mn1" id="mt1">1</a></sup></p>
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<p>In contrast, the growth pattern of future benefits by design varies by age in <abbr class="spell">DB</abbr> plans. Pension wealth—the present discounted value of the stream of future expected benefits—grows slowly in typical <abbr class="spell">DB</abbr> plans for young workers, increases rapidly once workers approach the plan's retirement age, but then levels off or can even decline at older ages. Pension wealth is minimal at younger ages because junior employees typically earn low wages and have completed only a few years of service. In addition, if a worker terminates employment with the firm, benefits at retirement are based only on earnings to date, and their present value is low because the worker receives them many years in the future. The present value of <abbr class="spell">DB</abbr> benefits rises rapidly as workers increase tenure with their current employer, as their earnings increase through real wage growth and inflation and as they approach the time when they can collect benefits. Workers in traditional <abbr class="spell">DB</abbr> plans often lose pension wealth, however, if they stay on the job beyond a certain age or seniority level. Growth in promised annual retirement benefits typically slows at older ages as wage growth declines. Some plans also cap the number of years of service that workers can credit toward their pensions, and others cap the share of preretirement earnings that the plan will replace in retirement. In addition, pension wealth can decline for workers who remain on the job past the plan's retirement age if the increase in annual benefits from an additional year of work is insufficient to offset the loss caused by a reduction in the number of pension installments. As a result, traditional <abbr class="spell">DB</abbr> plans often create a strong disincentive to continue working for the same employer at older ages.</p>
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<h3>Historical Trends</h3>
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<p>For the last quarter of a century, the occupational pension structure in the United States has been shifting from <abbr class="spell">DB</abbr> to <abbr class="spell">DC</abbr> plans (Buessing and Soto 2006; Copeland 2006; Wiatrowski 2004). Analysts have attributed the trend to a number of factors. First, government regulations have tended to favor <abbr class="spell">DC</abbr> plans over <abbr class="spell">DB</abbr> plans (Gebhardtsbauer 2004; Ghilarducci 2006). This began in the early 1980s after Internal Revenue Service regulations implemented a provision of the 1978 Revenue Act, which allowed employees to make voluntary contributions to employer-sponsored retirement plans with pretax dollars.<sup><a href="#mn2" id="mt2">2</a></sup> Subsequent tax legislation enacted in the 1980s, including the Tax Equity and Fiscal Responsibility Act of 1982 and the Tax Reform Act of 1986, reduced incentives for employers to maintain their <abbr class="spell">DB</abbr> plans (Rajnes 2002). Since then, the adoption of <abbr class="spell">DB</abbr> pension plans by new businesses has virtually halted and has been replaced by the adoption of <span class="nobr">401(k)</span>-type pension plans that permit voluntary employee contributions (Munnell and Sunden 2004). One study found that increased government regulation was the major factor in 44 percent of <abbr class="spell">DB</abbr> plan terminations in the late 1980s (Gebhardtsbauer 2004). Another study noted that from 1980 through 1996, government regulation increased the administrative costs of <abbr class="spell">DB</abbr> plans by twice as much as those of similar-sized <abbr class="spell">DC</abbr> plans (Hustead 1998).</p>
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<p>Second, the employment-sector shift away from manufacturing toward service and information technology decreased the availability of <abbr class="spell">DB</abbr> plans, as new firms in growing sectors of the economy adopted <abbr class="spell">DC</abbr> plans instead (Wiatrowski 2004). These structural changes in the economy are estimated to explain from 20 percent to 50 percent of the decline in <abbr class="spell">DB</abbr> pension plans (Clark, McDermed, and Trawick 1993; Gustman and Steinmeier 1992).</p>
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<p>Finally, some analysts suggest that worker demand has partly contributed to the popularity of <abbr class="spell">DC</abbr> plans over <abbr class="spell">DB</abbr> plans (Aaronson and Coronado 2005; Broadbent, Palumbo, and Woodman 2006). They assert that employees prefer <abbr class="spell">DC</abbr> plans because these plans are portable across jobs, balances are more transparent, and assets are managed by employees themselves (Broadbent, Palumbo, and Woodman 2006; Munnell and Soto 2007).</p>
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<p>The Pension Protection Act of 2006 may fuel the trend away from <abbr class="spell">DB</abbr> plans and toward <abbr class="spell">DC</abbr> plans by increasing <abbr class="spell">DB</abbr> plan reporting and disclosure rules, requiring stricter <abbr class="spell">DB</abbr> funding rules, making permanent the increases in <abbr class="spell">DC</abbr> contribution limits in the 2001 tax cuts, and facilitating the use of default participation rules in <abbr class="spell">DC</abbr> plans (<abbr class="spell">AARP</abbr> 2007; Center on Federal Financial Institutions 2006). Beyond this, the financial situation in 2008 resulted in at least a one trillion dollar loss in the value of assets held in private-sector <abbr class="spell">DB</abbr> plans (Munnell, Aubrey, and Muldoon 2008a) and another trillion dollar loss in state and local plans (Munnell, Aubrey, and Muldoon 2008b). Although the economic crisis has hurt the funding status of <abbr class="spell">DB</abbr> plans, legislation signed on December 23, 2008, will provide some pension funding relief (Groom Law Group 2008; Klose and Tooley 2009).</p>
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<h3>The Future of Pensions</h3>
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<p>The future of pensions remains uncertain as even employers with financially healthy <abbr class="spell">DB</abbr> plans consider whether to eliminate them over time. By December 2006, many American companies had instituted "freezes" in their <abbr class="spell">DB</abbr> pensions and replaced them with new or enhanced <abbr class="spell">DC</abbr> pensions (Smith and others 2007; VanDerhei 2007). In its survey of single-employer <abbr class="spell">DB</abbr> sponsors, the Government Accountability Office (2008) found that about half had one or more frozen plans; 23 percent of plan sponsors had completely frozen their plans with no further benefit accruals (hard freezes), and 22 percent had frozen either the years of service or the salary pension base. In 2007, a survey of private-sector <abbr class="spell">DB</abbr> plan sponsors by Mercer and the Employee Benefits Research Institute found that over a third of <abbr class="spell">DB</abbr> sponsors had recently frozen their <abbr class="spell">DB</abbr> pension plans, and a third of the remaining employers expected to freeze or close their plans in the next 2 years (Vanderhei 2007). Some experts expect that most private-sector plans will be frozen or terminated within the next few years (Aglira 2006; Gebhardtsbauer 2006; McKinsey & Company 2007).</p>
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|
<p>This is essentially what happened in the United Kingdom (<abbr>U.K.</abbr>) with private-sector <abbr class="spell">DB</abbr> pensions. When the British adopted transparent financial accounting standards and the government taxed pension plan accumulations it deemed to be excessive, the percent of assets "in terminated or frozen status" increased from 35 percent in 1998 to 70 percent in 2006 (Munnell and Soto 2007). A Towers Perrin 2008 survey of private employers in the United Kingdom documented the shift away from <abbr class="spell">DB</abbr> pensions through plan freezes and found that the percentage of new employees able to join a <abbr class="spell">DB</abbr> plan declined from 67 percent in 2002 to only 11 percent in 2008. Almost half of employers surveyed expected to make further changes to their pension schemes in the next 5 years, partly in response to personal account legislation proposed to become effective in 2012 (Towers Perrin 2008).</p>
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<p>The future prospects for <abbr class="spell">DB</abbr> pension plans in the public sector are more favorable. Very little of the shift from <abbr class="spell">DB</abbr> to <abbr class="spell">DC</abbr> plans has occurred in the public sector (Anderson and Brainard 2004; Broadbent, Palumbo, and Woodman 2006; Munnell, Haverstick, and Soto 2007; Turner and Hughes 2008). Although some state and local governments in the United States have introduced <abbr class="spell">DC</abbr> plans in some form or another, only Michigan and Alaska have primary plans that require new employees to join a <abbr class="spell">DC</abbr> plan. Other states that have introduced <abbr class="spell">DC</abbr> plans have maintained their <abbr class="spell">DB</abbr> plans (Munnell and others 2008). Additionally, unlike in the private sector where the primary motivation for establishing <abbr class="spell">DC</abbr> plans is economic, in the public sector the primary motivation appears to be political (Munnell and others 2008).</p>
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<p>Nonetheless, public-sector <abbr class="spell">DB</abbr> pension plans may also face increasing stress in future years. About a third of state and local government pension plans were less than 80 percent funded in 2006, and the share of underfunded plans increased to 46 percent with the 2008 stock market crash (Munnell, Aubry, and Muldoon 2008b). Correcting the funding deficit in the current recession may be particularly difficult as state and local tax revenues plummet. Financial and political pressures may push some of these government plans to freeze along with private-sector plans.</p>
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<h2>Methodology</h2>
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<p>Our analysis is based on projections of the major sources of retirement income from <abbr class="spell">SSA</abbr>'s <abbr>MINT</abbr> microsimulation model, which was developed by the agency's Office of Research, Evaluation, and Statistics with substantial assistance from the Brookings Institution, RAND Corporation, and Urban Institute. Starting with data from the <span class="nobr">1990–1993</span> and 1996 panels of the Census Bureau's Survey of Income and Program Participation (<abbr>SIPP</abbr>) matched to <abbr class="spell">SSA</abbr>'s earnings and benefit records through 2004, <abbr>MINT</abbr> projects the future life course of persons born from 1926 through 1965. <abbr>MINT</abbr> independently projects each person's marital changes, mortality, entry to and exit from Social Security Disability Insurance (<abbr class="spell">DI</abbr>) rolls, and age of first receipt of Social Security and pensions benefits. It also projects family income including Social Security benefits, pension income, asset income, earnings, Supplemental Security Income (<abbr class="spell">SSI</abbr>), income from nonspouse co-resident family members, and imputed rental income.<sup><a href="#mn3" id="mt3">3</a></sup></p>
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|
<p><abbr>MINT</abbr> directly measures the experiences of survey respondents as of the early 1990s—representing the first third to the first half of the lives of boomers—and changes in earnings and Social Security benefits through 2004 using <abbr class="spell">SSA</abbr> administrative records. <abbr>MINT</abbr> then projects individuals' characteristics and incomes into the future until death, accounting for major changes in the growth of economy-wide real earnings, the distribution of earnings both between and within birth cohorts, and the composition of the retiree population. All of these factors will affect the retirement income of future boomer retirees.<sup><a href="#mn4" id="mt4">4</a></sup> The projections in this article are based on <abbr>MINT</abbr>5.<sup><a href="#mn5" id="mt5">5</a></sup> More detail on <abbr>MINT</abbr> can be found in <a href="#appendixA">Appendix A</a> and in Smith and others (2007).</p>
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<h3>Projecting Pensions in <abbr>MINT</abbr></h3>
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<p><abbr>MINT</abbr> projects employer-sponsored <abbr class="spell">DB</abbr>, <abbr class="spell">DC</abbr>, and cash balance (<abbr class="spell">CB</abbr>) pension plans.<sup><a href="#mn6" id="mt6">6</a></sup> Pension benefits are based on an individual's entire work history (real and simulated) up to the projected retirement date. <abbr>SIPP</abbr> self-reported data provide baseline information about pension coverage on current and past jobs. The <abbr>MINT</abbr> baseline was recently updated to reflect pension plan structures through December 2006, including <abbr class="spell">DB</abbr> pension plan freezes and conversions to <abbr class="spell">CB</abbr> plans. The pension module uses data from the <abbr>PENSIM</abbr><sup><a href="#mn7" id="mt7">7</a></sup> model to impute future job changes and pension coverage on future jobs from the time of the <abbr>SIPP</abbr> interview through age 50. After age 50, the pension module assumes that no further job changes take place.</p>
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|
<p>With each job separation, <abbr>MINT</abbr> projects that some workers cash out their accumulated <abbr class="spell">DC</abbr> balances. The probability of cashing out is higher for younger workers than for older workers and higher for those with low account balances than for those with high account balances. Vested workers <span class="nobr">take-up</span> <abbr class="spell">DB</abbr> benefits at the latter of the plan's early retirement age or projected retirement age. Workers selecting a joint and survivor pension receive a reduced benefit with a 50 percent survivor annuity. <abbr>MINT</abbr> assigns a cost-of-living adjustment (<abbr>COLA</abbr>) to pensions based on sector prevalence.<sup><a href="#mn8" id="mt8">8</a></sup> See Toder and others (2002) for more details about the treatment of <abbr>COLA</abbr>s in the <abbr>MINT</abbr> pension module.</p>
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|
<p><abbr>MINT</abbr> projects <abbr class="spell">DC</abbr> pension participation and contributions using the 1996 <abbr>SIPP</abbr> matched to <abbr class="spell">SSA</abbr>'s Detailed Earnings Records.<sup><a href="#mn9" id="mt9">9</a></sup> <abbr class="spell">DC</abbr> pension participation is estimated using a logit model. Separate models of the probability of participation are estimated for those who contributed to a plan in the previous year and those who did not contribute. <abbr class="spell">DC</abbr> contributions are estimated using a random-effects Tobit model. This model allows for both an individual permanent and random error. It also controls for the statutory annual contribution limit.</p>
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<p>The share of account balances and contributions allocated to stocks and bonds varies by age on the basis of Employee Benefits Research Institute and Investment Company Institute data. Every 5 years, the model rebalances the portfolios according to the allocation strategy for the individual's attained age category. Subsequent contributions match the allocation strategy of the attained age, if different.</p>
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<p>The <abbr>MINT</abbr> model accumulates <abbr class="spell">DC</abbr> account balances from the time of the <abbr>SIPP</abbr> survey to 2005 using historical price changes and historical returns for stocks, long-term corporate bonds, and long-term government bonds. <abbr>MINT</abbr> assumes a real rate of return for stocks of 6.5 percent, a real rate of return for corporate bonds of 3.5 percent, and a real rate of return for government bonds of 3.0 percent. Rates of return for individuals are varied assuming a standard deviation of 17.28 percent for stocks and 2.14 percent for bonds. In every year, 1 percent is subtracted from each of the stock and bond real rates of return to reflect administrative costs.</p>
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<p><abbr>MINT</abbr> projects <abbr class="spell">DB</abbr> pensions using the Pension Benefit Guaranty Corporation's (<abbr class="spell">PBGC</abbr>'s) Pension Insurance Modeling System (<abbr>PIMS</abbr>). <abbr class="spell">DB</abbr> plan formulas, which are randomly assigned to <abbr class="spell">DB</abbr> participants, are based on broad industry, union status, firm size categories, and whether the firm offers dual (<abbr class="spell">DB</abbr> and <abbr class="spell">DC</abbr>) coverage.<sup><a href="#mn10" id="mt10">10</a></sup> <abbr>MINT</abbr> uses actual benefit formulas to calculate benefits for federal government workers and military personnel, and uses tables of replacement rates from the Bureau of Labor Statistics to calculate replacement rates for state and local government workers. The model projects conversions of pension plan type (from <abbr class="spell">DB</abbr> to <abbr class="spell">CB</abbr> or <abbr class="spell">DB</abbr> to <abbr class="spell">DC</abbr>) using actual plan change information for plans included in the <abbr>PIMS</abbr> data.</p>
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<p>If a worker is assigned to a plan that freezes, <abbr class="spell">DB</abbr> pension accruals stop as of the freeze date. The pension module assumes that all firms with jointly offered <abbr class="spell">DB</abbr> and <abbr class="spell">DC</abbr> plans increase the employer-match provisions of the existing plan and that all firms with stand-alone plans offer a substitute <abbr class="spell">DC</abbr> plan.<sup><a href="#mn11" id="mt11">11</a></sup> In the first year of a <abbr class="spell">DB</abbr> plan freeze, <abbr class="spell">DC</abbr> pension participation is estimated using the model for those who contributed to a <abbr class="spell">DC</abbr> pension in the previous year. That is, the pension module treats workers in the first year of the freeze as though they had previously contributed to a <abbr class="spell">DC</abbr> pension and maintains their tenure. After the first year of the freeze, <abbr class="spell">DC</abbr> pension participation is estimated using either the model for those who contributed to a <abbr class="spell">DC</abbr> pension in the previous year or the model for those who did not contribute. Workers are assigned to one of these two models based on their predicted participation status in a <abbr class="spell">DC</abbr> pension in the first year of the freeze.</p>
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<p><abbr>MINT</abbr> uses the 1997 to 2003 Form 5500 <span class="nobr">public-use</span> data to identify <abbr class="spell">DB</abbr> plans that converted to <abbr class="spell">CB</abbr> plans over that time period. Workers are assigned <abbr class="spell">CB</abbr> plans based on the transition provisions described in the summary plan description. If a worker is grandfathered into the <abbr class="spell">DB</abbr> plan, the worker retains the existing <abbr class="spell">DB</abbr> plan. If a worker is offered a choice, the pension module calculates the expected <abbr class="spell">DB</abbr> and <abbr class="spell">CB</abbr> benefit at the date of the conversion and assigns the worker the plan type that offers the higher expected benefit. Workers who join the firm after the conversion date are assigned the <abbr class="spell">CB</abbr> plan. At retirement, all <abbr class="spell">CB</abbr> accruals are paid out as a lump sum, which is added to other retirement account assets.</p>
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<p>Our analysis focuses on how a more rapid substitution of <abbr class="spell">DC</abbr> for <abbr class="spell">DB</abbr> plans would affect incomes of boomers at age 67 and therefore how it would affect the living standards of current workers in their retirement years. But the changes could also affect workers' living standards before age 67 through changes in wages and employee saving. For example, employers may increase wages when they freeze <abbr class="spell">DB</abbr> plans. If <abbr class="spell">DB</abbr> plan freezes represent a net reduction in total compensation for mid-career workers, employers may keep them whole by increasing wages. Alternatively, employers may use <abbr class="spell">DB</abbr> plan freezes, instead of wage cuts, as a way to reduce compensation. Either way, employers may prefer to reduce <abbr class="spell">DB</abbr> plan obligations as a share of total compensation for the reasons discussed above. In addition, when employers introduce new <abbr class="spell">DC</abbr> plans, the funding of employees' retirement changes from total employer funding (under <abbr class="spell">DB</abbr> plans) to mixed employee and/or employer funding. Employees' contributions reduce current consumption and workers' current living standards. These two effects of the substitution of new or enhanced <abbr class="spell">DC</abbr> plans for <abbr class="spell">DB</abbr> accruals—higher wages and higher employee contributions—have offsetting effects on workers' current living standards, but may not offset each other exactly. A more complex model of wage determination would be needed to simulate the total effects of <abbr class="spell">DB</abbr> plan freezes on worker <span class="nobr">well-being</span> over a lifetime.</p>
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<h3>Measuring Income in Retirement from <abbr class="spell">DB</abbr> Pension Plans and <abbr class="spell">DC</abbr> Retirement Accounts</h3>
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<p><abbr>MINT</abbr> computes income from financial assets by determining the real (price-indexed) annuity a family could buy if it annuitized 80 percent of the total savings amount. The annuity value calculated is used for that year's imputation of income from financial assets only. The annuity is recalculated each year to reflect changes in wealth amounts, based on the model of wealth <span class="nobr">spend-down,</span> and changes in life expectancy, given that the individual lived another year. For married couples, <abbr>MINT</abbr> assumes a 50 percent survivor annuity.</p>
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<p>We measure income from financial wealth and <abbr class="spell">DC</abbr> retirement accounts as annuities in order to ensure comparability with <abbr class="spell">DB</abbr> pensions and Social Security benefits, which are also annuities. Without this adjustment, <abbr>MINT</abbr> would overstate the loss in retirement <span class="nobr">well-being</span> because of the shift from <abbr class="spell">DB</abbr> pension income to <abbr class="spell">DC</abbr> assets; one dollar in <abbr class="spell">DB</abbr> pension wealth produces more measured income than one dollar in <abbr class="spell">DC</abbr> wealth. This happens because measured <abbr class="spell">DB</abbr> income includes both a return on accumulated assets and some return of principal, whereas measured financial wealth and retirement account income includes only the return on accumulated assets. We do, however, discount the annuity return by 20 percent to reflect the fact that people cannot necessarily purchase actuarially fair annuities and, if they choose to <span class="nobr">spend-down</span> their wealth outside of annuities based on life expectancy, they run the risk of depleting their assets if they live longer than expected.</p>
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<p>This income measure differs conceptually from asset income as measured by the Census Bureau and other analysts, which includes only the rate of return on assets (interest, dividends, and rental income) and excludes the potential consumption of capital that could be realized if a person spent down his or her wealth. The Census Bureau and many analysts include this consumption of capital from <abbr class="spell">DC</abbr> retirement accounts only if people choose regularly to withdraw money from their accounts. <abbr>MINT</abbr> treats 80 percent of the annuity value as income without regard to how much is actually withdrawn.</p>
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<h3>Pension Simulations</h3>
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<p>We test whether the distribution of economic <span class="nobr">well-being</span> at age 67 significantly differs between the <abbr>MINT</abbr> baseline and an alternate <abbr class="spell">DB</abbr> pension scenario that significantly increases the share of frozen <abbr class="spell">DB</abbr> plans as has happened in the United Kingdom.</p>
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<p>The "baseline scenario" represents the pension structure in the United States, including known pension plan freezes as of the end of 2006.<sup><a href="#mn12" id="mt12">12</a></sup> It maintains current employer plans, but permits <abbr class="spell">DB</abbr> and <abbr class="spell">DC</abbr> coverage to evolve over time with changes in the composition of employment and in factors influencing workers' <abbr class="spell">DC</abbr> plan participation and contribution rates. The alternative scenario, which we refer to as the "<abbr>U.K.</abbr> scenario" uses the same methodology as the <abbr>MINT</abbr> baseline pension scenario, but assumes that all private-sector <abbr class="spell">DB</abbr> pensions and a third of public-sector <abbr class="spell">DB</abbr> pensions will be frozen with no further benefit accruals (hard freeze) within 5 years. In each year from 2007 through 2011, an additional 20 percent of firms are randomly simulated to freeze their <abbr class="spell">DB</abbr> plans. Although this is more extreme than what has occurred in the United Kingdom, particularly with respect to public-sector <abbr class="spell">DB</abbr> pensions, it serves as an upper bound for what might happen to the pension structure in the United States. We assume that employers who freeze their plans will either establish a <abbr class="spell">DC</abbr> plan, if none exists, or increase contributions to their existing plan.</p>
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<p>The <abbr>U.K.</abbr> scenario will have little effect on boomer <abbr class="spell">DB</abbr> coverage, but will affect <abbr class="spell">DB</abbr> accruals. Current employees will not lose their <abbr class="spell">DB</abbr> coverage, but will have less pension wealth at retirement because their pensions will be based on their accruals only up to the time of the freeze. Because frozen plans are closed to new employees, however, workers who are projected to start new jobs with <abbr class="spell">DB</abbr> pensions under the baseline will lose <abbr class="spell">DB</abbr> coverage under the simulated pension freezes. For the most part, only these job changers will see their <abbr class="spell">DB</abbr> coverage status change under the option. (Some existing employees who are not vested in a plan, however, gain <abbr class="spell">DB</abbr> coverage they otherwise would not have because we assume that all existing employees become vested at the time of the pension freeze.)</p>
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<p>We analyze the characteristics and family income of individuals born in the boomer cohorts when they reach age 67 (the age by which most people will have retired). We assume husbands and wives share resources within the family. All reported income projections are in annual per capita (per person) 2007 dollars. Our sample sizes are large (over 100,000 records), therefore differences between most variables in the simulations will be statistically significant.</p>
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<p>Because the boomer cohort includes individuals born over a <span class="nobr">19-year</span> period, the pension freezes will affect its members differently. The oldest boomers, who were at or near retirement age when the first new plan freezes occurred in 2007, will have their <abbr class="spell">DB</abbr> pensions frozen with lengthy job tenures causing them to lose only a few high benefit-accrual years, but will also have relatively few years to boost their <abbr class="spell">DC</abbr> account balances before retirement. The youngest boomers, who will be under age 50 when the last projected new plan freezes occur in 2011, will have their <abbr class="spell">DB</abbr> pensions frozen with relatively little job tenure and lose many years of <abbr class="spell">DB</abbr> wealth accrual, but will also have relatively more years to accumulate <abbr class="spell">DC</abbr> pension wealth before retirement. To better understand the differential impact of <abbr class="spell">DB</abbr> pension freezes on the retirement incomes of boomers, we report results separately for four waves of boomers born from 1946 to 1950 (<span class="nobr">first-wave</span> boomers), from 1951 to 1955 (<span class="nobr">second-wave</span> boomers), from 1956 to 1960 (<span class="nobr">third-wave</span> boomers), and from 1961 to 1965 (<span class="nobr">last-wave</span> boomers).<sup><a href="#mn13" id="mt13">13</a></sup></p>
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<p>Boomers in the last wave are nearly twice as likely as their earlier counterparts to be Hispanic and are less likely to be college educated (Table 1). For example, 14 percent of <span class="nobr">last-wave</span> boomers are Hispanic, compared with only 8 percent of <span class="nobr">first-wave</span> boomers; only 28 percent of <span class="nobr">last-wave</span> boomers are college graduates, compared with 32 percent of <span class="nobr">first-wave</span> boomers. Relative to <span class="nobr">first-wave</span> boomers, <span class="nobr">last-wave</span> boomers are also less likely to be married at age 67 and more likely to be never married or divorced. Because pension coverage varies significantly by race/ethnicity, education, and other characteristics, differences in the composition of cohorts may mitigate or exacerbate the impact of the pension shift on retirement outcomes.</p>
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<div class="table" id="table1">
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<table>
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<caption><span class="tableNumber">Table 1. </span>Percentage distribution of selected characteristics projected for individuals at age 67</caption>
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|
<colgroup span="1" style="width:15em"></colgroup>
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|
<colgroup span="4" style="width:10em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" scope="col">Characteristic</th>
|
|
<th scope="col">First boomers <span class="nobr">(1946–1950)</span></th>
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|
<th scope="col">Second boomers <span class="nobr">(1951–1955)</span></th>
|
|
<th scope="col">Third boomers <span class="nobr">(1956–1960)</span></th>
|
|
<th scope="col">Last boomers <span class="nobr">(1961–1965)</span></th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub2" scope="row">All</th>
|
|
<td>100</td>
|
|
<td>100</td>
|
|
<td>100</td>
|
|
<td>100</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Sex</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Women</th>
|
|
<td>52</td>
|
|
<td>52</td>
|
|
<td>53</td>
|
|
<td>53</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Men</th>
|
|
<td>48</td>
|
|
<td>48</td>
|
|
<td>47</td>
|
|
<td>47</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Marital status</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Never married</th>
|
|
<td>5</td>
|
|
<td>6</td>
|
|
<td>7</td>
|
|
<td>8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Married</th>
|
|
<td>67</td>
|
|
<td>65</td>
|
|
<td>63</td>
|
|
<td>62</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Widowed</th>
|
|
<td>10</td>
|
|
<td>10</td>
|
|
<td>10</td>
|
|
<td>10</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Divorced</th>
|
|
<td>18</td>
|
|
<td>19</td>
|
|
<td>20</td>
|
|
<td>21</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Race/ethnicity</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Non-Hispanic white</th>
|
|
<td>77</td>
|
|
<td>74</td>
|
|
<td>72</td>
|
|
<td>69</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Non-Hispanic black</th>
|
|
<td>9</td>
|
|
<td>10</td>
|
|
<td>10</td>
|
|
<td>10</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Hispanic </th>
|
|
<td>8</td>
|
|
<td>10</td>
|
|
<td>12</td>
|
|
<td>14</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Other</th>
|
|
<td>6</td>
|
|
<td>6</td>
|
|
<td>6</td>
|
|
<td>7</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Education</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">High school dropout</th>
|
|
<td>11</td>
|
|
<td>11</td>
|
|
<td>11</td>
|
|
<td>13</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">High school graduate</th>
|
|
<td>57</td>
|
|
<td>60</td>
|
|
<td>61</td>
|
|
<td>60</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">College graduate</th>
|
|
<td>32</td>
|
|
<td>30</td>
|
|
<td>27</td>
|
|
<td>28</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Labor force experience</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Less than 20 years</th>
|
|
<td>13</td>
|
|
<td>12</td>
|
|
<td>12</td>
|
|
<td>11</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">20 to 29 years</th>
|
|
<td>10</td>
|
|
<td>11</td>
|
|
<td>11</td>
|
|
<td>12</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">30 or more years</th>
|
|
<td>77</td>
|
|
<td>77</td>
|
|
<td>77</td>
|
|
<td>77</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="onlyNote" colspan="5">SOURCE: Authors' computations of <abbr>MINT</abbr>5 (see text for details).</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<h2>Results</h2>
|
|
<p>We begin by looking at the level and composition of retirement income under the baseline and <abbr>U.K.</abbr> scenarios. An assessment is then made on how the accelerated decline in <abbr class="spell">DB</abbr> coverage will affect different demographic groups. Next we examine numbers and characteristics of winners and losers from the change in pension coverage. What might be driving the projected outcomes is then discussed. We end with reporting mean per capita family income at age 67 in 2007 dollars. Because the mean statistic is not representative when the data are skewed, we exclude individuals with family wealth in the top 5 percent of the distribution.</p>
|
|
<h3>Projected Sources of Retirement Incomes Under the Baseline and <abbr>U.K.</abbr> Scenarios</h3>
|
|
<p>Among the first wave of boomers, 85 percent are expected to have income from financial assets, and 48 percent will have earnings, either their own or their spouses' (Table 2). Only 3 percent of individuals are projected to receive <abbr class="spell">SSI</abbr> payments, but 85 percent will have imputed rental income from homeownership and 94 percent will receive Social Security benefits. Under the baseline scenario, 50 percent of <span class="nobr">first-wave</span> boomers are projected to have family <abbr class="spell">DB</abbr> pension benefits and 76 percent are projected to have <abbr class="spell">DC</abbr> retirement accounts. Pension coverage does not change under the <abbr>U.K.</abbr> scenario for <span class="nobr">first-wave</span> boomers because no one who had <abbr class="spell">DB</abbr> coverage before the freeze loses their coverage (although, as we show below, their benefits are reduced), and because <span class="nobr">first-wave</span> boomers are near or at retirement age and are less likely than younger workers to <span class="nobr">take-up</span> <abbr class="spell">DC</abbr> pensions when newly offered.</p>
|
|
<div class="table" id="table2">
|
|
<table>
|
|
<caption><span class="tableNumber">Table 2. </span>Percent of individuals with family income at age 67, by scenario and income source (in percent)</caption>
|
|
<colgroup span="1" style="width:15em"></colgroup>
|
|
<colgroup span="4" style="width:10em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" id="c1">Scenario and income source</th>
|
|
<th id="c2">First boomers <span class="nobr">(1946–1950)</span></th>
|
|
<th id="c3">Second boomers <span class="nobr">(1951–1955)</span></th>
|
|
<th id="c4">Third boomers <span class="nobr">(1956–1960)</span></th>
|
|
<th id="c5">Last boomers <span class="nobr">(1961–1965)</span></th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub0" id="r1" headers="c1">Baseline</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r2" headers="r1 c1">Income from assets</th>
|
|
<td headers="r1 r2 c2">85</td>
|
|
<td headers="r1 r2 c3">86</td>
|
|
<td headers="r1 r2 c4">86</td>
|
|
<td headers="r1 r2 c5">86</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r3" headers="r1 c1">Earnings</th>
|
|
<td headers="r1 r3 c2">48</td>
|
|
<td headers="r1 r3 c3">44</td>
|
|
<td headers="r1 r3 c4">42</td>
|
|
<td headers="r1 r3 c5">42</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r4" headers="r1 c1"><abbr class="spell">SSI</abbr> payments</th>
|
|
<td headers="r1 r4 c2">3</td>
|
|
<td headers="r1 r4 c3">2</td>
|
|
<td headers="r1 r4 c4">2</td>
|
|
<td headers="r1 r4 c5">2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r5" headers="r1 c1">Imputed rental income</th>
|
|
<td headers="r1 r5 c2">85</td>
|
|
<td headers="r1 r5 c3">85</td>
|
|
<td headers="r1 r5 c4">84</td>
|
|
<td headers="r1 r5 c5">83</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r6" headers="r1 c1">Social Security benefits</th>
|
|
<td headers="r1 r6 c2">94</td>
|
|
<td headers="r1 r6 c3">94</td>
|
|
<td headers="r1 r6 c4">95</td>
|
|
<td headers="r1 r6 c5">94</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r7" headers="r1 c1"><abbr class="spell">DB</abbr> pension benefits</th>
|
|
<td headers="r1 r7 c2">50</td>
|
|
<td headers="r1 r7 c3">48</td>
|
|
<td headers="r1 r7 c4">46</td>
|
|
<td headers="r1 r7 c5">44</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r8" headers="r1 c1">Retirement accounts</th>
|
|
<td headers="r1 r8 c2">76</td>
|
|
<td headers="r1 r8 c3">76</td>
|
|
<td headers="r1 r8 c4">77</td>
|
|
<td headers="r1 r8 c5">77</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub2" id="r9" headers="r1 r8 c1">Total income</th>
|
|
<td headers="r1 r8 r9 c2">100</td>
|
|
<td headers="r1 r8 r9 c3">100</td>
|
|
<td headers="r1 r8 r9 c4">100</td>
|
|
<td headers="r1 r8 r9 c5">100</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r10" headers="c1">United Kingdom</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r11" headers="r10 c1"><abbr class="spell">DB</abbr> pension benefits</th>
|
|
<td headers="r10 r11 c2">50</td>
|
|
<td headers="r10 r11 c3">48</td>
|
|
<td headers="r10 r11 c4">46</td>
|
|
<td headers="r10 r11 c5">42</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r12" headers="r10 c1">Retirement accounts</th>
|
|
<td headers="r10 r12 c2">76</td>
|
|
<td headers="r10 r12 c3">77</td>
|
|
<td headers="r10 r12 c4">78</td>
|
|
<td headers="r10 r12 c5">79</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub2" id="r13" headers="r10 r12 c1">Total income</th>
|
|
<td headers="r10 r12 r13 c2">100</td>
|
|
<td headers="r10 r12 r13 c3">100</td>
|
|
<td headers="r10 r12 r13 c4">100</td>
|
|
<td headers="r10 r12 r13 c5">100</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="5">SOURCE: Authors' computations of <abbr>MINT</abbr>5 (see text for details).</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="5">NOTE: Projections exclude individuals with family wealth in the top 5 percent of the distribution.</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<p>Compared with the first wave of boomers, the last wave of boomers is equally likely to have income from assets (86 percent versus 85 percent), but less likely to have earnings (42 percent versus 48 percent). Under the baseline, <span class="nobr">last-wave</span> boomers are 6 percentage points less likely than <span class="nobr">first-wave</span> boomers to have <abbr class="spell">DB</abbr> pension benefits (44 percent versus 50 percent), but are equally likely to have <abbr class="spell">DC</abbr> retirement accounts (77 percent versus 76 percent). The <abbr>U.K.</abbr> scenario accelerates the shift from <abbr class="spell">DB</abbr> to <abbr class="spell">DC</abbr> pensions, reducing the share of <span class="nobr">last-wave</span> boomers with <abbr class="spell">DB</abbr> pensions by an additional 2 percentage points and increasing the share with <abbr class="spell">DC</abbr> retirement accounts by 2 percentage points, compared with the baseline. Freezing more <abbr class="spell">DB</abbr> plans does not cause many boomers to lose <abbr class="spell">DB</abbr> coverage because all workers with existing <abbr class="spell">DB</abbr> plans retain them, even though they stop accruing benefits, and some workers who are not vested gain coverage. The only workers who lose coverage under the <abbr>U.K.</abbr> scenario are those who started a new job that provides a <abbr class="spell">DB</abbr> pension subject to a hard freeze. The <abbr>U.K.</abbr> scenario also increases the numbers with <abbr class="spell">DC</abbr> coverage only slightly because many of the affected workers already had <abbr class="spell">DC</abbr> coverage from their prior or current jobs.</p>
|
|
<p>Under the baseline, average per capita family <abbr class="spell">DB</abbr> pension benefits are projected to decline over time from $5,100 for <span class="nobr">first-wave</span> boomers to $3,000 for <span class="nobr">last-wave</span> boomers, and income from <abbr class="spell">DC</abbr> retirement accounts is projected to increase over time from $6,200 for <span class="nobr">first-wave</span> boomers to $7,700 for <span class="nobr">last-wave</span> boomers (Table 3). For boomers in the first wave, average per capita family <abbr class="spell">DB</abbr> pension benefits are expected to be only about $200 lower under the <abbr>U.K.</abbr> scenario than under the baseline, and average income from <abbr class="spell">DC</abbr> retirement accounts increases by less than $100. For boomers in the last wave, average per capita family <abbr class="spell">DB</abbr> pension benefits are expected to be about $1,100 lower under the <abbr>U.K.</abbr> scenario than under the baseline, and average income from <abbr class="spell">DC</abbr> retirement accounts is projected to be about $300 higher. Over time, the declines in <abbr class="spell">DB</abbr> pension benefits and the increases in income from <abbr class="spell">DC</abbr> retirement accounts are greater under the <abbr>U.K.</abbr> scenario than under the baseline. Furthermore, under both scenarios, the decline in <abbr class="spell">DB</abbr> benefits is greater than the increase in income from <abbr class="spell">DC</abbr> retirement accounts. As a result, per capita family income at age 67 is about $100 lower for <span class="nobr">first-wave</span> boomers and about $700 lower for <span class="nobr">last-wave</span> boomers under the <abbr>U.K.</abbr> scenario than under the baseline.<sup><a href="#mn14" id="mt14">14</a></sup> On average, the additional income from <abbr class="spell">DC</abbr> retirement accounts under the <abbr>U.K.</abbr> scenario replaces only part of the lost income from <abbr class="spell">DB</abbr> pensions. This is largely because the pension freezes deprive boomers, especially those in the last wave, of their high accrual years for <abbr class="spell">DB</abbr> pension wealth; and the replacement <abbr class="spell">DC</abbr> plan does not generate assets large enough to replace the lost <abbr class="spell">DB</abbr> wealth.</p>
|
|
<div class="table" id="table3">
|
|
<table>
|
|
<caption><span class="tableNumber">Table 3. </span>Mean family income per person at age 67, by scenario and income source (in thousands of 2007 dollars)</caption>
|
|
<colgroup span="1" style="width:15em"></colgroup>
|
|
<colgroup span="4" style="width:10em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" id="c1">Scenario and income source</th>
|
|
<th id="c2">First boomers <span class="nobr">(1946–1950)</span></th>
|
|
<th id="c3">Second boomers <span class="nobr">(1951–1955)</span></th>
|
|
<th id="c4">Third boomers <span class="nobr">(1956–1960)</span></th>
|
|
<th id="c5">Last boomers <span class="nobr">(1961–1965)</span></th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub0" id="r1" headers="c1">Baseline</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r2" headers="r1 c1">Income from assets</th>
|
|
<td headers="r1 r2 c2">7.1</td>
|
|
<td headers="r1 r2 c3">7.3</td>
|
|
<td headers="r1 r2 c4">7.0</td>
|
|
<td headers="r1 r2 c5">6.9</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r3" headers="r1 c1">Earnings</th>
|
|
<td headers="r1 r3 c2">10.7</td>
|
|
<td headers="r1 r3 c3">9.6</td>
|
|
<td headers="r1 r3 c4">9.2</td>
|
|
<td headers="r1 r3 c5">9.5</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r4" headers="r1 c1"><abbr class="spell">SSI</abbr> payments</th>
|
|
<td headers="r1 r4 c2">0.1</td>
|
|
<td headers="r1 r4 c3">0.1</td>
|
|
<td headers="r1 r4 c4">0.1</td>
|
|
<td headers="r1 r4 c5">0.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r5" headers="r1 c1">Imputed rental income</th>
|
|
<td headers="r1 r5 c2">3.0</td>
|
|
<td headers="r1 r5 c3">3.0</td>
|
|
<td headers="r1 r5 c4">2.8</td>
|
|
<td headers="r1 r5 c5">2.8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r6" headers="r1 c1">Social Security benefits</th>
|
|
<td headers="r1 r6 c2">12.7</td>
|
|
<td headers="r1 r6 c3">13.1</td>
|
|
<td headers="r1 r6 c4">13.1</td>
|
|
<td headers="r1 r6 c5">13.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r7" headers="r1 c1"><abbr class="spell">DB</abbr> pension benefits</th>
|
|
<td headers="r1 r7 c2">5.1</td>
|
|
<td headers="r1 r7 c3">4.1</td>
|
|
<td headers="r1 r7 c4">3.4</td>
|
|
<td headers="r1 r7 c5">3.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r8" headers="r1 c1">Retirement accounts</th>
|
|
<td headers="r1 r8 c2">6.2</td>
|
|
<td headers="r1 r8 c3">6.8</td>
|
|
<td headers="r1 r8 c4">7.5</td>
|
|
<td headers="r1 r8 c5">7.7</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub2" id="r9" headers="r1 r8 c1">Total income</th>
|
|
<td headers="r1 r8 r9 c2">45.0</td>
|
|
<td headers="r1 r8 r9 c3">44.0</td>
|
|
<td headers="r1 r8 r9 c4">43.2</td>
|
|
<td headers="r1 r8 r9 c5">43.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r10" headers="c1">United Kingdom</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r11" headers="r10 c1">Income from assets</th>
|
|
<td headers="r10 r11 c2">7.1</td>
|
|
<td headers="r10 r11 c3">7.2</td>
|
|
<td headers="r10 r11 c4">6.9</td>
|
|
<td headers="r10 r11 c5">6.8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r12" headers="r10 c1">Earnings</th>
|
|
<td headers="r10 r12 c2">10.8</td>
|
|
<td headers="r10 r12 c3">9.6</td>
|
|
<td headers="r10 r12 c4">9.3</td>
|
|
<td headers="r10 r12 c5">9.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r13" headers="r10 c1"><abbr class="spell">SSI</abbr> payments</th>
|
|
<td headers="r10 r13 c2">0.1</td>
|
|
<td headers="r10 r13 c3">0.1</td>
|
|
<td headers="r10 r13 c4">0.1</td>
|
|
<td headers="r10 r13 c5">0.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r14" headers="r10 c1">Imputed rental income</th>
|
|
<td headers="r10 r14 c2">3.0</td>
|
|
<td headers="r10 r14 c3">3.0</td>
|
|
<td headers="r10 r14 c4">2.8</td>
|
|
<td headers="r10 r14 c5">2.8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r15" headers="r10 c1">Social Security benefits</th>
|
|
<td headers="r10 r15 c2">12.7</td>
|
|
<td headers="r10 r15 c3">13.1</td>
|
|
<td headers="r10 r15 c4">13.1</td>
|
|
<td headers="r10 r15 c5">13.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r16" headers="r10 c1"><abbr class="spell">DB</abbr> pension benefits</th>
|
|
<td headers="r10 r16 c2">4.8</td>
|
|
<td headers="r10 r16 c3">3.5</td>
|
|
<td headers="r10 r16 c4">2.6</td>
|
|
<td headers="r10 r16 c5">2.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r17" headers="r10 c1">Retirement accounts</th>
|
|
<td headers="r10 r17 c2">6.2</td>
|
|
<td headers="r10 r17 c3">6.9</td>
|
|
<td headers="r10 r17 c4">7.6</td>
|
|
<td headers="r10 r17 c5">8.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub2" id="r18" headers="r10 r17 c1">Total income</th>
|
|
<td headers="r10 r17 r18 c2">44.8</td>
|
|
<td headers="r10 r17 r18 c3">43.5</td>
|
|
<td headers="r10 r17 r18 c4">42.5</td>
|
|
<td headers="r10 r17 r18 c5">42.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r19" headers="c1">Difference between baseline and <abbr>U.K.</abbr> scenarios</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r20" headers="r19 c1">Income from assets</th>
|
|
<td headers="r19 r20 c2">0.0</td>
|
|
<td headers="r19 r20 c3">0.0</td>
|
|
<td headers="r19 r20 c4">0.0</td>
|
|
<td headers="r19 r20 c5">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r21" headers="r19 c1">Earnings</th>
|
|
<td headers="r19 r21 c2">0.0</td>
|
|
<td headers="r19 r21 c3">0.0</td>
|
|
<td headers="r19 r21 c4">0.0</td>
|
|
<td headers="r19 r21 c5">0.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r22" headers="r19 c1"><abbr class="spell">SSI</abbr> payments</th>
|
|
<td headers="r19 r22 c2">0.0</td>
|
|
<td headers="r19 r22 c3">0.0</td>
|
|
<td headers="r19 r22 c4">0.0</td>
|
|
<td headers="r19 r22 c5">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r23" headers="r19 c1">Imputed rental income</th>
|
|
<td headers="r19 r23 c2">0.0</td>
|
|
<td headers="r19 r23 c3">0.0</td>
|
|
<td headers="r19 r23 c4">0.0</td>
|
|
<td headers="r19 r23 c5">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r24" headers="r19 c1">Social Security benefits</th>
|
|
<td headers="r19 r24 c2">0.0</td>
|
|
<td headers="r19 r24 c3">0.0</td>
|
|
<td headers="r19 r24 c4">0.0</td>
|
|
<td headers="r19 r24 c5">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r25" headers="r19 c1"><abbr class="spell">DB</abbr> pension benefits</th>
|
|
<td headers="r19 r25 c2">-0.2</td>
|
|
<td headers="r19 r25 c3">-0.6</td>
|
|
<td headers="r19 r25 c4">-0.9</td>
|
|
<td headers="r19 r25 c5">-1.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r26" headers="r19 c1">Retirement accounts</th>
|
|
<td headers="r19 r26 c2">0.0</td>
|
|
<td headers="r19 r26 c3">0.1</td>
|
|
<td headers="r19 r26 c4">0.2</td>
|
|
<td headers="r19 r26 c5">0.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub2" id="r27" headers="r19 r26 c1">Total income</th>
|
|
<td headers="r19 r26 r27 c2">-0.1</td>
|
|
<td headers="r19 r26 r27 c3">-0.5</td>
|
|
<td headers="r19 r26 r27 c4">-0.7</td>
|
|
<td headers="r19 r26 r27 c5">-0.7</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="5">SOURCE: Authors' computations of <abbr>MINT</abbr>5 (see text for details).</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="5">NOTE: Projections exclude individuals with family wealth in the top 5 percent of the distribution. Because of rounding, income components may not sum to total.</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<h3>Subgroup Differences in Projected Retirement Outcomes</h3>
|
|
<p>The impact of the simulations on different demographic groups will depend on whether they typically have pension benefits. Individuals who are married, non-Hispanic white, and college educated have more experience in the labor force and are in the highest shared lifetime earnings and retirement income quintiles; they are also most likely to have <abbr class="spell">DB</abbr> pensions and <abbr class="spell">DC</abbr> retirement accounts (Table 4).<sup><a href="#mn15" id="mt15">15</a></sup></p>
|
|
<div class="table" id="table4">
|
|
<table>
|
|
<caption><span class="tableNumber">Table 4. </span>Percent of individuals with family pensions at age 67 under the baseline scenario, by selected characteristics and pension type</caption>
|
|
<colgroup span="1" style="width:15em"></colgroup>
|
|
<colgroup span="4" style="width:6em"></colgroup>
|
|
<colgroup span="4" style="width:6em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" rowspan="2" scope="colgroup">Characteristic</th>
|
|
<th class="spanner" colspan="4" scope="colgroup"><abbr class="spell">DB</abbr> benefits</th>
|
|
<th class="spanner" colspan="4" scope="colgroup">Retirement accounts</th>
|
|
</tr>
|
|
<tr>
|
|
<th scope="col">First boomers <span class="nobr">(1946–1950)</span></th>
|
|
<th scope="col">Second boomers <span class="nobr">(1951–1955)</span></th>
|
|
<th scope="col">Third boomers <span class="nobr">(1956–1960)</span></th>
|
|
<th scope="col">Last boomers <span class="nobr">(1961–1965)</span></th>
|
|
<th scope="col">First boomers <span class="nobr">(1946–1950)</span></th>
|
|
<th scope="col">Second boomers <span class="nobr">(1951–1955)</span></th>
|
|
<th scope="col">Third boomers <span class="nobr">(1956–1960)</span></th>
|
|
<th scope="col">Last boomers <span class="nobr">(1961–1965)</span></th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub2" scope="row">All</th>
|
|
<td>50</td>
|
|
<td>48</td>
|
|
<td>46</td>
|
|
<td>43</td>
|
|
<td>75</td>
|
|
<td>75</td>
|
|
<td>76</td>
|
|
<td>76</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Sex</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Women</th>
|
|
<td>51</td>
|
|
<td>49</td>
|
|
<td>47</td>
|
|
<td>44</td>
|
|
<td>74</td>
|
|
<td>74</td>
|
|
<td>74</td>
|
|
<td>75</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Men</th>
|
|
<td>49</td>
|
|
<td>48</td>
|
|
<td>46</td>
|
|
<td>42</td>
|
|
<td>76</td>
|
|
<td>77</td>
|
|
<td>78</td>
|
|
<td>78</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Marital status</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Never married</th>
|
|
<td>36</td>
|
|
<td>35</td>
|
|
<td>31</td>
|
|
<td>30</td>
|
|
<td>55</td>
|
|
<td>61</td>
|
|
<td>61</td>
|
|
<td>63</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Married</th>
|
|
<td>54</td>
|
|
<td>53</td>
|
|
<td>51</td>
|
|
<td>48</td>
|
|
<td>81</td>
|
|
<td>82</td>
|
|
<td>83</td>
|
|
<td>83</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Widowed</th>
|
|
<td>43</td>
|
|
<td>44</td>
|
|
<td>41</td>
|
|
<td>39</td>
|
|
<td>60</td>
|
|
<td>63</td>
|
|
<td>64</td>
|
|
<td>64</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Divorced</th>
|
|
<td>42</td>
|
|
<td>38</td>
|
|
<td>39</td>
|
|
<td>36</td>
|
|
<td>65</td>
|
|
<td>64</td>
|
|
<td>66</td>
|
|
<td>67</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Race/ethnicity</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Non-Hispanic white</th>
|
|
<td>52</td>
|
|
<td>50</td>
|
|
<td>49</td>
|
|
<td>46</td>
|
|
<td>80</td>
|
|
<td>80</td>
|
|
<td>81</td>
|
|
<td>81</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Non-Hispanic black</th>
|
|
<td>49</td>
|
|
<td>48</td>
|
|
<td>45</td>
|
|
<td>40</td>
|
|
<td>60</td>
|
|
<td>64</td>
|
|
<td>65</td>
|
|
<td>67</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Hispanic </th>
|
|
<td>38</td>
|
|
<td>39</td>
|
|
<td>37</td>
|
|
<td>35</td>
|
|
<td>51</td>
|
|
<td>58</td>
|
|
<td>61</td>
|
|
<td>65</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Other</th>
|
|
<td>37</td>
|
|
<td>38</td>
|
|
<td>34</td>
|
|
<td>37</td>
|
|
<td>63</td>
|
|
<td>64</td>
|
|
<td>66</td>
|
|
<td>71</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Education</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">High school dropout</th>
|
|
<td>29</td>
|
|
<td>29</td>
|
|
<td>29</td>
|
|
<td>28</td>
|
|
<td>40</td>
|
|
<td>44</td>
|
|
<td>48</td>
|
|
<td>49</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">High school graduate</th>
|
|
<td>50</td>
|
|
<td>48</td>
|
|
<td>47</td>
|
|
<td>43</td>
|
|
<td>75</td>
|
|
<td>75</td>
|
|
<td>76</td>
|
|
<td>77</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">College graduate</th>
|
|
<td>58</td>
|
|
<td>55</td>
|
|
<td>53</td>
|
|
<td>51</td>
|
|
<td>88</td>
|
|
<td>88</td>
|
|
<td>88</td>
|
|
<td>89</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Labor force experience</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Less than 20 years</th>
|
|
<td>27</td>
|
|
<td>24</td>
|
|
<td>23</td>
|
|
<td>22</td>
|
|
<td>38</td>
|
|
<td>37</td>
|
|
<td>39</td>
|
|
<td>41</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">20 to 29 years</th>
|
|
<td>39</td>
|
|
<td>37</td>
|
|
<td>35</td>
|
|
<td>34</td>
|
|
<td>58</td>
|
|
<td>60</td>
|
|
<td>61</td>
|
|
<td>59</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">30 or more years</th>
|
|
<td>55</td>
|
|
<td>53</td>
|
|
<td>51</td>
|
|
<td>48</td>
|
|
<td>83</td>
|
|
<td>83</td>
|
|
<td>84</td>
|
|
<td>85</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Shared lifetime earnings</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Bottom quintile</th>
|
|
<td>24</td>
|
|
<td>25</td>
|
|
<td>24</td>
|
|
<td>23</td>
|
|
<td>32</td>
|
|
<td>35</td>
|
|
<td>37</td>
|
|
<td>39</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">2nd quintile </th>
|
|
<td>47</td>
|
|
<td>44</td>
|
|
<td>42</td>
|
|
<td>39</td>
|
|
<td>70</td>
|
|
<td>71</td>
|
|
<td>71</td>
|
|
<td>72</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">3rd quintile </th>
|
|
<td>56</td>
|
|
<td>54</td>
|
|
<td>52</td>
|
|
<td>48</td>
|
|
<td>85</td>
|
|
<td>86</td>
|
|
<td>86</td>
|
|
<td>86</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">4th quintile </th>
|
|
<td>62</td>
|
|
<td>62</td>
|
|
<td>57</td>
|
|
<td>55</td>
|
|
<td>93</td>
|
|
<td>92</td>
|
|
<td>92</td>
|
|
<td>93</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Top quintile</th>
|
|
<td>62</td>
|
|
<td>58</td>
|
|
<td>57</td>
|
|
<td>56</td>
|
|
<td>96</td>
|
|
<td>96</td>
|
|
<td>96</td>
|
|
<td>96</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Income quintile</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Bottom quintile</th>
|
|
<td>21</td>
|
|
<td>23</td>
|
|
<td>23</td>
|
|
<td>22</td>
|
|
<td>36</td>
|
|
<td>38</td>
|
|
<td>40</td>
|
|
<td>43</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">2nd quintile </th>
|
|
<td>46</td>
|
|
<td>47</td>
|
|
<td>44</td>
|
|
<td>40</td>
|
|
<td>69</td>
|
|
<td>71</td>
|
|
<td>73</td>
|
|
<td>73</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">3rd quintile </th>
|
|
<td>61</td>
|
|
<td>56</td>
|
|
<td>52</td>
|
|
<td>49</td>
|
|
<td>85</td>
|
|
<td>85</td>
|
|
<td>85</td>
|
|
<td>85</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">4th quintile </th>
|
|
<td>61</td>
|
|
<td>59</td>
|
|
<td>58</td>
|
|
<td>54</td>
|
|
<td>93</td>
|
|
<td>92</td>
|
|
<td>92</td>
|
|
<td>92</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Top quintile</th>
|
|
<td>62</td>
|
|
<td>59</td>
|
|
<td>57</td>
|
|
<td>54</td>
|
|
<td>96</td>
|
|
<td>95</td>
|
|
<td>95</td>
|
|
<td>95</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="9">SOURCE: Authors' computations of <abbr>MINT</abbr>5 (see text for details).</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="9">NOTE: Projections exclude individuals with family wealth in the top 5 percent of the distribution. Shared lifetime earnings is the average of <span class="nobr">wage-indexed</span> shared earnings between ages 22 and 62, where shared earnings are computed by assigning each individual half the total earnings of the couple in the years when the individual is married and his or her own earnings in years when nonmarried.</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<p>Demographic groups most likely to have pensions also have higher average family incomes and are projected to be most affected by the pension shift. Under the baseline, mean family income per person is highest for men, married adults, non-Hispanic whites, college graduates, those with 30 or more years of labor force experience, and those in the top quintile of shared lifetime earnings—in every boomer wave (Table 5). Both the absolute and percentage declines in average family income per person between the baseline and <abbr>U.K.</abbr> scenarios are largest for many of these same groups (Table 6). For the <span class="nobr">last-wave</span> boomers, however, non-Hispanic blacks experience the largest percentage decline in income among race/ethnicity groups, nonmarried individuals experience greater percentage declines in income than married individuals, and women experience a slightly larger percentage decline in income than men. Blacks and nonmarried individuals have lower <abbr class="spell">DC</abbr> participation rates than non-Hispanic whites and married individuals and are less likely to voluntarily contribute enough to the substitute <abbr class="spell">DC</abbr> plan to make up for the lost <abbr class="spell">DB</abbr> benefits. The loss is greater for <span class="nobr">last-wave</span> boomers who have more years of lower contributions. Still, the overall percentage declines in income are greater in the highest than in the lowest quintiles of individuals ranked either by shared lifetime earnings or retirement income at age 67.</p>
|
|
<div class="table" id="table5">
|
|
<table>
|
|
<caption><span class="tableNumber">Table 5. </span>Mean family income per person at age 67, by selected characteristics (in thousands of 2007 dollars)</caption>
|
|
<colgroup span="1" style="width:15em"></colgroup>
|
|
<colgroup span="8" style="width:6em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" rowspan="2" scope="colgroup">Characteristic</th>
|
|
<th class="spanner" colspan="4" scope="colgroup">Baseline</th>
|
|
<th class="spanner" colspan="4" scope="colgroup">Difference between baseline and <abbr>U.K.</abbr> scenarios</th>
|
|
</tr>
|
|
<tr>
|
|
<th scope="col">First boomers <span class="nobr">(1946–1950)</span></th>
|
|
<th scope="col">Second boomers <span class="nobr">(1951–1955)</span></th>
|
|
<th scope="col">Third boomers <span class="nobr">(1956–1960)</span></th>
|
|
<th scope="col">Last boomers <span class="nobr">(1961–1965)</span></th>
|
|
<th scope="col">First boomers <span class="nobr">(1946–1950)</span></th>
|
|
<th scope="col">Second boomers <span class="nobr">(1951–1955)</span></th>
|
|
<th scope="col">Third boomers <span class="nobr">(1956–1960)</span></th>
|
|
<th scope="col">Last boomers <span class="nobr">(1961–1965)</span></th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub2" scope="row">All</th>
|
|
<td>45.0</td>
|
|
<td>44.0</td>
|
|
<td>43.2</td>
|
|
<td>43.0</td>
|
|
<td>-0.1</td>
|
|
<td>-0.5</td>
|
|
<td>-0.7</td>
|
|
<td>-0.7</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Sex</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Women</th>
|
|
<td>42.8</td>
|
|
<td>41.9</td>
|
|
<td>41.4</td>
|
|
<td>40.8</td>
|
|
<td>-0.1</td>
|
|
<td>-0.4</td>
|
|
<td>-0.6</td>
|
|
<td>-0.7</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Men</th>
|
|
<td>47.4</td>
|
|
<td>46.3</td>
|
|
<td>45.1</td>
|
|
<td>45.6</td>
|
|
<td>-0.2</td>
|
|
<td>-0.6</td>
|
|
<td>-0.7</td>
|
|
<td>-0.7</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Marital status</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Never married</th>
|
|
<td>39.4</td>
|
|
<td>41.1</td>
|
|
<td>38.0</td>
|
|
<td>38.3</td>
|
|
<td>0.0</td>
|
|
<td>-0.6</td>
|
|
<td>-0.7</td>
|
|
<td>-0.7</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Married</th>
|
|
<td>46.7</td>
|
|
<td>45.3</td>
|
|
<td>44.1</td>
|
|
<td>44.3</td>
|
|
<td>-0.1</td>
|
|
<td>-0.5</td>
|
|
<td>-0.7</td>
|
|
<td>-0.7</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Widowed</th>
|
|
<td>40.3</td>
|
|
<td>41.6</td>
|
|
<td>40.8</td>
|
|
<td>39.7</td>
|
|
<td>-0.2</td>
|
|
<td>-0.4</td>
|
|
<td>-0.6</td>
|
|
<td>-0.7</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Divorced</th>
|
|
<td>42.7</td>
|
|
<td>41.8</td>
|
|
<td>43.1</td>
|
|
<td>42.4</td>
|
|
<td>-0.2</td>
|
|
<td>-0.5</td>
|
|
<td>-0.8</td>
|
|
<td>-0.8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Race/ethnicity</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Non-Hispanic white</th>
|
|
<td>49.1</td>
|
|
<td>48.6</td>
|
|
<td>48.0</td>
|
|
<td>47.6</td>
|
|
<td>-0.2</td>
|
|
<td>-0.6</td>
|
|
<td>-0.8</td>
|
|
<td>-0.8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Non-Hispanic black</th>
|
|
<td>31.3</td>
|
|
<td>32.2</td>
|
|
<td>31.3</td>
|
|
<td>31.2</td>
|
|
<td>0.0</td>
|
|
<td>-0.5</td>
|
|
<td>-0.5</td>
|
|
<td>-0.8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Hispanic</th>
|
|
<td>26.3</td>
|
|
<td>26.3</td>
|
|
<td>27.6</td>
|
|
<td>29.2</td>
|
|
<td>-0.1</td>
|
|
<td>-0.1</td>
|
|
<td>-0.4</td>
|
|
<td>-0.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Other</th>
|
|
<td>40.3</td>
|
|
<td>38.0</td>
|
|
<td>39.1</td>
|
|
<td>46.1</td>
|
|
<td>-0.1</td>
|
|
<td>-0.3</td>
|
|
<td>-0.4</td>
|
|
<td>-0.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Education</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">High school dropout</th>
|
|
<td>19.2</td>
|
|
<td>19.0</td>
|
|
<td>20.1</td>
|
|
<td>21.0</td>
|
|
<td>-0.1</td>
|
|
<td>-0.1</td>
|
|
<td>-0.2</td>
|
|
<td>-0.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">High school graduate</th>
|
|
<td>38.4</td>
|
|
<td>37.9</td>
|
|
<td>37.6</td>
|
|
<td>36.5</td>
|
|
<td>-0.1</td>
|
|
<td>-0.4</td>
|
|
<td>-0.6</td>
|
|
<td>-0.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">College graduate</th>
|
|
<td>68.2</td>
|
|
<td>67.6</td>
|
|
<td>68.2</td>
|
|
<td>69.8</td>
|
|
<td>-0.2</td>
|
|
<td>-0.8</td>
|
|
<td>-1.2</td>
|
|
<td>-1.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Labor force experience</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Less than 20 years</th>
|
|
<td>22.2</td>
|
|
<td>20.7</td>
|
|
<td>21.8</td>
|
|
<td>22.0</td>
|
|
<td>-0.1</td>
|
|
<td>-0.1</td>
|
|
<td>-0.2</td>
|
|
<td>-0.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">20 to 29 years</th>
|
|
<td>32.0</td>
|
|
<td>31.3</td>
|
|
<td>30.6</td>
|
|
<td>29.6</td>
|
|
<td>0.0</td>
|
|
<td>-0.1</td>
|
|
<td>-0.3</td>
|
|
<td>-0.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">30 or more years</th>
|
|
<td>50.7</td>
|
|
<td>49.4</td>
|
|
<td>48.3</td>
|
|
<td>48.5</td>
|
|
<td>-0.2</td>
|
|
<td>-0.6</td>
|
|
<td>-0.8</td>
|
|
<td>-0.8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Shared lifetime earnings</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Bottom quintile</th>
|
|
<td>16.8</td>
|
|
<td>16.9</td>
|
|
<td>16.9</td>
|
|
<td>16.9</td>
|
|
<td>0.0</td>
|
|
<td>0.0</td>
|
|
<td>-0.1</td>
|
|
<td>-0.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">2nd quintile</th>
|
|
<td>29.3</td>
|
|
<td>27.4</td>
|
|
<td>27.5</td>
|
|
<td>26.9</td>
|
|
<td>-0.1</td>
|
|
<td>-0.1</td>
|
|
<td>-0.2</td>
|
|
<td>-0.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">3rd quintile</th>
|
|
<td>41.4</td>
|
|
<td>39.7</td>
|
|
<td>37.7</td>
|
|
<td>38.0</td>
|
|
<td>-0.1</td>
|
|
<td>-0.4</td>
|
|
<td>-0.5</td>
|
|
<td>-0.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">4th quintile</th>
|
|
<td>56.5</td>
|
|
<td>56.1</td>
|
|
<td>53.5</td>
|
|
<td>52.9</td>
|
|
<td>-0.2</td>
|
|
<td>-0.7</td>
|
|
<td>-0.8</td>
|
|
<td>-0.8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Top quintile</th>
|
|
<td>85.8</td>
|
|
<td>87.5</td>
|
|
<td>88.1</td>
|
|
<td>90.0</td>
|
|
<td>-0.3</td>
|
|
<td>-1.3</td>
|
|
<td>-2.0</td>
|
|
<td>-2.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Income quintile</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Bottom quintile</th>
|
|
<td>11.0</td>
|
|
<td>10.9</td>
|
|
<td>10.7</td>
|
|
<td>10.7</td>
|
|
<td>0.0</td>
|
|
<td>0.0</td>
|
|
<td>0.0</td>
|
|
<td>0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">2nd quintile</th>
|
|
<td>23.3</td>
|
|
<td>22.6</td>
|
|
<td>22.1</td>
|
|
<td>21.8</td>
|
|
<td>0.0</td>
|
|
<td>-0.1</td>
|
|
<td>-0.1</td>
|
|
<td>-0.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">3rd quintile</th>
|
|
<td>36.6</td>
|
|
<td>35.5</td>
|
|
<td>34.7</td>
|
|
<td>33.8</td>
|
|
<td>-0.1</td>
|
|
<td>-0.3</td>
|
|
<td>-0.4</td>
|
|
<td>-0.4</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">4th quintile</th>
|
|
<td>58.0</td>
|
|
<td>56.9</td>
|
|
<td>55.3</td>
|
|
<td>55.0</td>
|
|
<td>-0.2</td>
|
|
<td>-0.8</td>
|
|
<td>-0.9</td>
|
|
<td>-0.9</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Top quintile</th>
|
|
<td>110.3</td>
|
|
<td>111.0</td>
|
|
<td>110.0</td>
|
|
<td>112.9</td>
|
|
<td>-0.5</td>
|
|
<td>-1.5</td>
|
|
<td>-2.3</td>
|
|
<td>-2.5</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="9">SOURCE: Authors' computations of <abbr>MINT</abbr>5 (see text for details).</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="9">NOTE: Projections exclude individuals with family wealth in the top 5 percent of the distribution. Shared lifetime earnings is the average of <span class="nobr">wage-indexed</span> shared earnings between ages 22 and 62, where shared earnings are computed by assigning each individual half the total earnings of the couple in the years when the individual is married and his or her own earnings in years when nonmarried.</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<div class="table" id="table6">
|
|
<table>
|
|
<caption><span class="tableNumber">Table 6. </span>Percent change in mean family income per person at age 67 between the baseline and <abbr>U.K.</abbr> scenarios, by selected characteristics</caption>
|
|
<colgroup span="1" style="width:15em"></colgroup>
|
|
<colgroup span="4" style="width:10em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" scope="col">Characteristic</th>
|
|
<th scope="col">First boomers <span class="nobr">(1946–1950)</span></th>
|
|
<th scope="col">Second boomers <span class="nobr">(1951–1955)</span></th>
|
|
<th scope="col">Third boomers <span class="nobr">(1956–1960)</span></th>
|
|
<th scope="col">Last boomers <span class="nobr">(1961–1965)</span></th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub2" scope="row">All</th>
|
|
<td>-0.3</td>
|
|
<td>-1.1</td>
|
|
<td>-1.6</td>
|
|
<td>-1.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Sex</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Women</th>
|
|
<td>-0.3</td>
|
|
<td>-1.0</td>
|
|
<td>-1.5</td>
|
|
<td>-1.7</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Men</th>
|
|
<td>-0.3</td>
|
|
<td>-1.2</td>
|
|
<td>-1.7</td>
|
|
<td>-1.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Marital status</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Never married</th>
|
|
<td>0.0</td>
|
|
<td>-1.5</td>
|
|
<td>-2.0</td>
|
|
<td>-1.8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Married</th>
|
|
<td>-0.3</td>
|
|
<td>-1.1</td>
|
|
<td>-1.5</td>
|
|
<td>-1.5</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Widowed</th>
|
|
<td>-0.4</td>
|
|
<td>-0.9</td>
|
|
<td>-1.4</td>
|
|
<td>-1.8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Divorced</th>
|
|
<td>-0.5</td>
|
|
<td>-1.2</td>
|
|
<td>-1.8</td>
|
|
<td>-1.8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Race/ethnicity</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Non-Hispanic white</th>
|
|
<td>-0.3</td>
|
|
<td>-1.1</td>
|
|
<td>-1.6</td>
|
|
<td>-1.7</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Non-Hispanic black</th>
|
|
<td>-0.1</td>
|
|
<td>-1.6</td>
|
|
<td>-1.5</td>
|
|
<td>-2.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Hispanic </th>
|
|
<td>-0.3</td>
|
|
<td>-0.4</td>
|
|
<td>-1.4</td>
|
|
<td>-0.8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Other</th>
|
|
<td>-0.3</td>
|
|
<td>-0.8</td>
|
|
<td>-1.1</td>
|
|
<td>-1.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Education</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">High school dropout</th>
|
|
<td>-0.3</td>
|
|
<td>-0.5</td>
|
|
<td>-0.8</td>
|
|
<td>-1.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">High school graduate</th>
|
|
<td>-0.3</td>
|
|
<td>-1.1</td>
|
|
<td>-1.5</td>
|
|
<td>-1.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">College graduate</th>
|
|
<td>-0.3</td>
|
|
<td>-1.2</td>
|
|
<td>-1.8</td>
|
|
<td>-1.7</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Labor force experience</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Less than 20 years</th>
|
|
<td>-0.3</td>
|
|
<td>-0.4</td>
|
|
<td>-0.7</td>
|
|
<td>-1.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">20 to 29 years</th>
|
|
<td>0.0</td>
|
|
<td>-0.4</td>
|
|
<td>-1.1</td>
|
|
<td>-0.9</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">30 or more years</th>
|
|
<td>-0.3</td>
|
|
<td>-1.2</td>
|
|
<td>-1.7</td>
|
|
<td>-1.8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Shared lifetime earnings</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Bottom quintile</th>
|
|
<td>0.0</td>
|
|
<td>-0.2</td>
|
|
<td>-0.5</td>
|
|
<td>-0.9</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">2nd quintile </th>
|
|
<td>-0.3</td>
|
|
<td>-0.5</td>
|
|
<td>-0.7</td>
|
|
<td>-1.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">3rd quintile </th>
|
|
<td>-0.3</td>
|
|
<td>-0.9</td>
|
|
<td>-1.4</td>
|
|
<td>-1.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">4th quintile </th>
|
|
<td>-0.4</td>
|
|
<td>-1.3</td>
|
|
<td>-1.5</td>
|
|
<td>-1.4</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Top quintile</th>
|
|
<td>-0.4</td>
|
|
<td>-1.5</td>
|
|
<td>-2.3</td>
|
|
<td>-2.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Income quintile</th>
|
|
<td colspan="4"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Bottom quintile</th>
|
|
<td>0.0</td>
|
|
<td>0.0</td>
|
|
<td>-0.1</td>
|
|
<td>-0.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">2nd quintile </th>
|
|
<td>0.2</td>
|
|
<td>-0.4</td>
|
|
<td>-0.6</td>
|
|
<td>-0.8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">3rd quintile </th>
|
|
<td>-0.3</td>
|
|
<td>-0.7</td>
|
|
<td>-1.2</td>
|
|
<td>-1.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">4th quintile </th>
|
|
<td>-0.4</td>
|
|
<td>-1.4</td>
|
|
<td>-1.7</td>
|
|
<td>-1.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Top quintile</th>
|
|
<td>-0.5</td>
|
|
<td>-1.4</td>
|
|
<td>-2.1</td>
|
|
<td>-2.2</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="5">SOURCE: Authors' computations of <abbr>MINT</abbr>5 (see text for details).</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="5">NOTE: Projections exclude individuals with family wealth in the top 5 percent of the distribution. Shared lifetime earnings is the average of <span class="nobr">wage-indexed</span> shared earnings between ages 22 and 62, where shared earnings are computed by assigning each individual half the total earnings of the couple in the years when the individual is married and his or her own earnings in years when nonmarried.</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<h3>Who Are the Winners and Losers?</h3>
|
|
<p>The accelerated switch from <abbr class="spell">DB</abbr> to <abbr class="spell">DC</abbr> plans illustrated in the <abbr>U.K.</abbr> scenario produces both losers and winners. Many boomers will lose under the <abbr>U.K.</abbr> scenario, particularly mid- and late-career employees whose pension benefits will be frozen before reaching their highest accrual rate, those who contribute little or nothing to <abbr class="spell">DC</abbr> plans, and those who have lower than average market returns. Others, however, may gain from the shift from <abbr class="spell">DB</abbr> to <abbr class="spell">DC</abbr> plans, especially those who currently fare poorly under <abbr class="spell">DB</abbr> plans because they have intermittent work histories or change jobs frequently and those with high rates of return on their retirement account investments.</p>
|
|
<p>Our simulations show that the losers greatly outnumber the winners (Table 7).<sup><a href="#mn16" id="mt16">16</a></sup> When the shift from <abbr class="spell">DB</abbr> to <abbr class="spell">DC</abbr> pensions is accelerated under the <abbr>U.K.</abbr> scenario, only 7 percent of <span class="nobr">first-wave</span> boomers, 8 percent of <span class="nobr">second-wave</span> boomers, 9 percent of <span class="nobr">third-wave</span> boomers, and 11 percent of <span class="nobr">last-wave</span> boomers would see their retirement incomes increase. There are many more who would lose under the <abbr>U.K.</abbr> scenario—12 percent of <span class="nobr">first-wave</span> boomers, 18 percent of <span class="nobr">second-wave</span> boomers, 22 percent of <span class="nobr">third-wave</span> boomers, and 26 percent of <span class="nobr">last-wave</span> boomers. Boomers in high socioeconomic groups are most likely to win and lose because they are the people with pension benefits in the baseline scenario that may potentially be frozen. For example, 12 percent of <span class="nobr">last-wave</span> boomers in the highest income quintile are projected to be winners, compared with only 6 percent of their counterparts in the lowest income quintile; and 48 percent of <span class="nobr">last-wave</span> boomers with the highest incomes are projected to be losers, compared with only 8 percent of those with the lowest incomes (Chart 1). All in all, 60 percent of <span class="nobr">last-wave</span> boomers in the highest income quintile will experience a change (either positive or negative) in their per capita family income because of the change in pension schemes. Note that the percentage affected is higher than the 54 percent of <span class="nobr">last-wave</span> boomers in the highest income quintile who are projected to have family <abbr class="spell">DB</abbr> pension benefits in the baseline scenario (see Table 4). This apparent discrepancy occurs because some individuals (especially those with higher income) wait until after age 67 to retire and collect their <abbr class="spell">DB</abbr> pensions. These individuals will appear as winners in Table 7 because the increase in <abbr class="spell">DC</abbr> retirement account income has not yet been offset by the lower future <abbr class="spell">DB</abbr> pension income. Also, we assume workers who are not vested under the baseline scenario become immediately vested under a pension freeze, thereby gaining <abbr class="spell">DB</abbr> pension income. Many of the people who would gain pension coverage as a result of the freeze under the <abbr>U.K.</abbr> scenario may have previously changed jobs or dropped out of the labor force at a relatively young age because of a disability and have not become vested under the baseline.</p>
|
|
<div class="table" id="table7">
|
|
<table>
|
|
<caption><span class="tableNumber">Table 7. </span>Percent of individuals who win and lose at age 67 between the baseline and <abbr>U.K.</abbr> scenarios, by selected characteristics</caption>
|
|
<colgroup span="1" style="width:15em"></colgroup>
|
|
<colgroup span="4" style="width:6em"></colgroup>
|
|
<colgroup span="4" style="width:6em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" rowspan="2" scope="colgroup">Characteristic</th>
|
|
<th class="spanner" colspan="4" scope="colgroup">Winners</th>
|
|
<th class="spanner" colspan="4" scope="colgroup">Losers</th>
|
|
</tr>
|
|
<tr>
|
|
<th scope="col">First boomers <span class="nobr">(1946–1950)</span></th>
|
|
<th scope="col">Second boomers <span class="nobr">(1951–1955)</span></th>
|
|
<th scope="col">Third boomers <span class="nobr">(1956–1960)</span></th>
|
|
<th scope="col">Last boomers <span class="nobr">(1961–1965)</span></th>
|
|
<th scope="col">First boomers <span class="nobr">(1946–1950)</span></th>
|
|
<th scope="col">Second boomers <span class="nobr">(1951–1955)</span></th>
|
|
<th scope="col">Third boomers <span class="nobr">(1956–1960)</span></th>
|
|
<th scope="col">Last boomers <span class="nobr">(1961–1965)</span></th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub2" scope="row">All</th>
|
|
<td>7</td>
|
|
<td>8</td>
|
|
<td>9</td>
|
|
<td>11</td>
|
|
<td>12</td>
|
|
<td>18</td>
|
|
<td>22</td>
|
|
<td>26</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Sex</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Women</th>
|
|
<td>6</td>
|
|
<td>7</td>
|
|
<td>9</td>
|
|
<td>10</td>
|
|
<td>10</td>
|
|
<td>17</td>
|
|
<td>21</td>
|
|
<td>25</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Men</th>
|
|
<td>9</td>
|
|
<td>9</td>
|
|
<td>10</td>
|
|
<td>12</td>
|
|
<td>14</td>
|
|
<td>20</td>
|
|
<td>23</td>
|
|
<td>27</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Marital status</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Never married</th>
|
|
<td>4</td>
|
|
<td>4</td>
|
|
<td>6</td>
|
|
<td>7</td>
|
|
<td>6</td>
|
|
<td>14</td>
|
|
<td>17</td>
|
|
<td>20</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Married</th>
|
|
<td>9</td>
|
|
<td>9</td>
|
|
<td>11</td>
|
|
<td>13</td>
|
|
<td>13</td>
|
|
<td>20</td>
|
|
<td>24</td>
|
|
<td>28</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Widowed</th>
|
|
<td>4</td>
|
|
<td>5</td>
|
|
<td>7</td>
|
|
<td>9</td>
|
|
<td>8</td>
|
|
<td>14</td>
|
|
<td>16</td>
|
|
<td>22</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Divorced</th>
|
|
<td>5</td>
|
|
<td>5</td>
|
|
<td>7</td>
|
|
<td>8</td>
|
|
<td>9</td>
|
|
<td>14</td>
|
|
<td>18</td>
|
|
<td>24</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Race/ethnicity</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Non-Hispanic white</th>
|
|
<td>8</td>
|
|
<td>8</td>
|
|
<td>10</td>
|
|
<td>11</td>
|
|
<td>13</td>
|
|
<td>20</td>
|
|
<td>24</td>
|
|
<td>28</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Non-Hispanic black</th>
|
|
<td>5</td>
|
|
<td>6</td>
|
|
<td>8</td>
|
|
<td>10</td>
|
|
<td>10</td>
|
|
<td>16</td>
|
|
<td>18</td>
|
|
<td>22</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Hispanic </th>
|
|
<td>5</td>
|
|
<td>6</td>
|
|
<td>7</td>
|
|
<td>9</td>
|
|
<td>8</td>
|
|
<td>11</td>
|
|
<td>17</td>
|
|
<td>18</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Other</th>
|
|
<td>5</td>
|
|
<td>7</td>
|
|
<td>9</td>
|
|
<td>9</td>
|
|
<td>10</td>
|
|
<td>14</td>
|
|
<td>15</td>
|
|
<td>23</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Education</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">High school dropout</th>
|
|
<td>3</td>
|
|
<td>4</td>
|
|
<td>5</td>
|
|
<td>6</td>
|
|
<td>6</td>
|
|
<td>8</td>
|
|
<td>11</td>
|
|
<td>14</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">High school graduate</th>
|
|
<td>7</td>
|
|
<td>8</td>
|
|
<td>9</td>
|
|
<td>11</td>
|
|
<td>12</td>
|
|
<td>18</td>
|
|
<td>21</td>
|
|
<td>24</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">College graduate</th>
|
|
<td>10</td>
|
|
<td>9</td>
|
|
<td>11</td>
|
|
<td>12</td>
|
|
<td>15</td>
|
|
<td>22</td>
|
|
<td>28</td>
|
|
<td>34</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Labor force experience</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Less than 20 years</th>
|
|
<td>2</td>
|
|
<td>2</td>
|
|
<td>3</td>
|
|
<td>4</td>
|
|
<td>3</td>
|
|
<td>5</td>
|
|
<td>6</td>
|
|
<td>9</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">20 to 29 years</th>
|
|
<td>4</td>
|
|
<td>7</td>
|
|
<td>7</td>
|
|
<td>9</td>
|
|
<td>5</td>
|
|
<td>9</td>
|
|
<td>14</td>
|
|
<td>16</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">30 or more years</th>
|
|
<td>9</td>
|
|
<td>9</td>
|
|
<td>11</td>
|
|
<td>12</td>
|
|
<td>14</td>
|
|
<td>21</td>
|
|
<td>25</td>
|
|
<td>30</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Shared lifetime earnings</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Bottom quintile</th>
|
|
<td>1</td>
|
|
<td>2</td>
|
|
<td>4</td>
|
|
<td>6</td>
|
|
<td>2</td>
|
|
<td>4</td>
|
|
<td>6</td>
|
|
<td>9</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">2nd quintile </th>
|
|
<td>5</td>
|
|
<td>7</td>
|
|
<td>8</td>
|
|
<td>10</td>
|
|
<td>8</td>
|
|
<td>12</td>
|
|
<td>15</td>
|
|
<td>21</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">3rd quintile </th>
|
|
<td>8</td>
|
|
<td>9</td>
|
|
<td>10</td>
|
|
<td>12</td>
|
|
<td>13</td>
|
|
<td>19</td>
|
|
<td>23</td>
|
|
<td>26</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">4th quintile </th>
|
|
<td>10</td>
|
|
<td>10</td>
|
|
<td>12</td>
|
|
<td>13</td>
|
|
<td>16</td>
|
|
<td>25</td>
|
|
<td>28</td>
|
|
<td>30</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Top quintile</th>
|
|
<td>13</td>
|
|
<td>11</td>
|
|
<td>12</td>
|
|
<td>13</td>
|
|
<td>20</td>
|
|
<td>31</td>
|
|
<td>37</td>
|
|
<td>44</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Income quintile</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Bottom quintile</th>
|
|
<td>1</td>
|
|
<td>2</td>
|
|
<td>4</td>
|
|
<td>6</td>
|
|
<td>2</td>
|
|
<td>3</td>
|
|
<td>6</td>
|
|
<td>8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">2nd quintile </th>
|
|
<td>5</td>
|
|
<td>8</td>
|
|
<td>8</td>
|
|
<td>10</td>
|
|
<td>6</td>
|
|
<td>11</td>
|
|
<td>15</td>
|
|
<td>19</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">3rd quintile </th>
|
|
<td>7</td>
|
|
<td>10</td>
|
|
<td>10</td>
|
|
<td>12</td>
|
|
<td>13</td>
|
|
<td>19</td>
|
|
<td>23</td>
|
|
<td>25</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">4th quintile </th>
|
|
<td>11</td>
|
|
<td>9</td>
|
|
<td>12</td>
|
|
<td>13</td>
|
|
<td>18</td>
|
|
<td>26</td>
|
|
<td>29</td>
|
|
<td>30</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Top quintile</th>
|
|
<td>13</td>
|
|
<td>11</td>
|
|
<td>12</td>
|
|
<td>12</td>
|
|
<td>20</td>
|
|
<td>32</td>
|
|
<td>38</td>
|
|
<td>48</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="9">SOURCE: Authors' computations of <abbr>MINT</abbr>5 (see text for details).</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="9">NOTE: Projections exclude individuals with family wealth in the top 5 percent of the distribution. Shared lifetime earnings is the average of <span class="nobr">wage-indexed</span> shared earnings between ages 22 and 62, where shared earnings are computed by assigning each individual half the total earnings of the couple in the years when the individual is married and his or her own earnings in years when nonmarried. Winners and losers are defined as having at least a $10 change in income between the baseline and <abbr>U.K.</abbr> scenarios.</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<div class="chartCenter">
|
|
<div class="chart700">
|
|
<div class="title" id="chart1">Chart 1.<br>Percent of <span class="nobr">last-wave</span> boomers who win and lose income at age 67 between the baseline and <abbr>U.K.</abbr> scenarios, by income quintile</div>
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<div class="scrollChart"><img src="v69n3p1_chart1.gif" alt="Chart 1 illustrates some of the data already presented in the article in Table 7. It displays the data from the Winners, Last Boomers, and Losers, Last Boomers, columns for the All and Income Quintile rows." width="700" height="343" /></div>
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<div class="firstNote">SOURCE: Authors' computations of <abbr>MINT</abbr>5 (see text for details).</div>
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<div class="lastNote">NOTE: Projections exclude individuals with family wealth in the top 5 percent of the distribution. Shared lifetime earnings is the average of <span class="nobr">wage-indexed</span> shared earnings between ages 22 and 62, where shared earnings are computed by assigning each individual half the total earnings of the couple in the years when the individual is married and his or her own earnings in years when nonmarried. Winners and losers are defined as having at least a $10 change in income between the baseline and <abbr>U.K.</abbr> scenarios.</div>
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</div>
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</div>
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<p>It is also worth noting that among <span class="nobr">last-wave</span> boomers, there are about four times as many losers than winners in the highest income quintile, but only slightly more losers than winners in the lowest quintile. <span class="nobr">High-income</span> workers are significantly more likely than <span class="nobr">low-income</span> workers to lose under the <abbr>U.K.</abbr> scenario because they are more likely to be constrained by the statutory contribution thresholds in <span class="nobr">401(k)</span> plans, which limit their ability to replace lost <abbr class="spell">DB</abbr> pension wealth. These thresholds will increase in the future with changes in prices per the Pension Protection Act of 2006. Because wages are projected to increase faster than prices, later cohorts of workers will be more constrained by the statutory contribution thresholds in <span class="nobr">401(k)</span> plans than earlier cohorts, and these constraints will mostly affect <span class="nobr">higher-income</span> workers who are the ones far most likely to contribute the maximum. Furthermore, many <abbr class="spell">DB</abbr> plans provide higher accrual rates for workers with earnings above the Social Security taxable maximum, so the loss of <abbr class="spell">DB</abbr> benefits is also especially high for some <span class="nobr">high-income</span> workers. These highly compensated workers who are affected by <abbr class="spell">DB</abbr> pension freezes replace their relatively generous <abbr class="spell">DB</abbr> plan with a more constrained <abbr class="spell">DC</abbr> plan.</p>
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<p>The percentage of those who lose relatively large amounts of income under the <abbr>U.K.</abbr> scenario is also concentrated among the highest income quintiles. The <abbr>U.K.</abbr> scenario reduces income at age 67 by 5 percent or more for 15 percent of <span class="nobr">last-wave</span> boomers in the top income quintile, but by only 3 percent of those in the bottom quintile (Chart 2). In contrast, the share of large winners is fairly evenly distributed among income quintiles. The population subgroups least likely to gain large amounts of income under the <abbr>U.K.</abbr> scenario are high school dropouts, those with less than 20 years of labor force experience, and those in the bottom quintile of lifetime earnings (Table 8).</p>
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<div class="chartCenter">
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<div class="chart700">
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<div class="title" id="chart2">Chart 2.<br>Percent of <span class="nobr">last-wave</span> boomers who win and lose 5 percent or more income at age 67 between the baseline and <abbr>U.K.</abbr> scenarios, by income quintile</div>
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<div class="scrollChart"><img src="v69n3p1_chart2.gif" alt="Bar chart with tabular version below." width="700" height="345" /></div>
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<div class="table altTable"><a class="altToggle" href="">Show as table</a>
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<table>
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<caption><span class="tableNumber">Table equivalent for Chart 2. </span>Percent of <span class="nobr">last-wave</span> boomers who win and lose 5 percent or more income at age 67 between the baseline and <abbr>U.K.</abbr> scenarios, by income quintile</caption>
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<colgroup span="1" style="width:15em"></colgroup>
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<colgroup span="2" style="width:10em"></colgroup>
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<thead>
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<tr>
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<th class="stubHeading" scope="col">Characteristic</th>
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<th class="spanner" scope="col">Winners</th>
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<th class="spanner" scope="col">Losers</th>
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</tr>
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</thead>
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<tbody>
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<tr>
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<th class="stub2" scope="row">All</th>
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<td>3</td>
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<td>10</td>
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</tr>
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<tr>
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<th class="stub0" scope="rowgroup">Income quintile</th>
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<td colspan="2"></td>
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</tr>
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<tr>
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<th class="stub1" scope="row">Bottom quintile</th>
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<td>2</td>
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<td>3</td>
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</tr>
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<tr>
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<th class="stub1" scope="row">2nd quintile </th>
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<td>3</td>
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<td>9</td>
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</tr>
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<tr>
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<th class="stub1" scope="row">3rd quintile </th>
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<td>3</td>
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<td>12</td>
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</tr>
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<tr>
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<th class="stub1" scope="row">4th quintile </th>
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<td>3</td>
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<td>14</td>
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</tr>
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<tr>
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<th class="stub1" scope="row">Top quintile</th>
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<td>2</td>
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<td>15</td>
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</tr>
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</tbody>
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<tfoot>
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<tr>
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<td class="noNotes" colspan="3"> </td>
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</tr>
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</tfoot>
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</table>
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</div>
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<div class="firstNote">SOURCE: Authors' computations of <abbr>MINT</abbr>5 (see text for details)</div>
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<div class="lastNote">NOTE: Sample includes individuals with a change of $10 in per person family income at age 67 between the baseline and <abbr>U.K.</abbr> scenarios. Projections exclude individuals with family wealth in the top 5 percent of the distribution. Winners and losers are defined as having a 5 percent or more change in income between the baseline and <abbr>U.K.</abbr> scenarios.</div>
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</div>
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</div>
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<div class="table" id="table8">
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<table>
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<caption><span class="tableNumber">Table 8. </span>Percent of individuals who win and lose 5 percent or more of income at age 67 between the baseline and <abbr>U.K.</abbr> scenarios, by selected characteristics</caption>
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<colgroup span="1" style="width:15em"></colgroup>
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<colgroup span="4" style="width:6em"></colgroup>
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<colgroup span="4" style="width:6em"></colgroup>
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<thead>
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<tr>
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<th class="stubHeading" rowspan="2" scope="colgroup">Characteristic</th>
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<th class="spanner" colspan="4" scope="colgroup">Winners</th>
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<th class="spanner" colspan="4" scope="colgroup">Losers</th>
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</tr>
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<tr>
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<th scope="col">First boomers <span class="nobr">(1946–1950)</span></th>
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<th scope="col">Second boomers <span class="nobr">(1951–1955)</span></th>
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<th scope="col">Third boomers <span class="nobr">(1956–1960)</span></th>
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<th scope="col">Last boomers <span class="nobr">(1961–1965)</span></th>
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<th scope="col">First boomers <span class="nobr">(1946–1950)</span></th>
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<th scope="col">Second boomers <span class="nobr">(1951–1955)</span></th>
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<th scope="col">Third boomers <span class="nobr">(1956–1960)</span></th>
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<th scope="col">Last boomers <span class="nobr">(1961–1965)</span></th>
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</tr>
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</thead>
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<tbody>
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<tr>
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<th class="stub2" scope="row">All</th>
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<td>1</td>
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<td>1</td>
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<td>2</td>
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<td>3</td>
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<td>3</td>
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<td>7</td>
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<td>9</td>
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<td>10</td>
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</tr>
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<tr>
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<th class="stub0" scope="rowgroup">Sex</th>
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<td colspan="8"></td>
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</tr>
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<tr>
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<th class="stub1" scope="row">Women</th>
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<td>1</td>
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<td>1</td>
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<td>2</td>
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<td>2</td>
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<td>3</td>
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<td>7</td>
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<td>9</td>
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<td>11</td>
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</tr>
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<tr>
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<th class="stub1" scope="row">Men</th>
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<td>1</td>
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<td>1</td>
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<td>2</td>
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<td>3</td>
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<td>3</td>
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<td>8</td>
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<td>10</td>
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<td>10</td>
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</tr>
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<tr>
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<th class="stub0" scope="rowgroup">Marital status</th>
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<td colspan="8"></td>
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</tr>
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<tr>
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<th class="stub1" scope="row">Never married</th>
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<td>1</td>
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<td>1</td>
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<td>2</td>
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<td>3</td>
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<td>1</td>
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<td>7</td>
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<td>8</td>
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<td>8</td>
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</tr>
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<tr>
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<th class="stub1" scope="row">Married</th>
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<td>1</td>
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<td>1</td>
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<td>2</td>
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<td>3</td>
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<td>3</td>
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<td>8</td>
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<td>10</td>
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<td>11</td>
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</tr>
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<tr>
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<th class="stub1" scope="row">Widowed</th>
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<td>1</td>
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<td>1</td>
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<td>1</td>
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<td>3</td>
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<td>2</td>
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<td>6</td>
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<td>7</td>
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<td>9</td>
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</tr>
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<tr>
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<th class="stub1" scope="row">Divorced</th>
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<td>1</td>
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<td>1</td>
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<td>2</td>
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<td>2</td>
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<td>3</td>
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<td>6</td>
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<td>9</td>
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<td>11</td>
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</tr>
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<tr>
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<th class="stub0" scope="rowgroup">Race/ethnicity</th>
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<td colspan="8"></td>
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</tr>
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<tr>
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<th class="stub1" scope="row">Non-Hispanic white</th>
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<td>1</td>
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<td>1</td>
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<td>2</td>
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<td>3</td>
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<td>3</td>
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|
<td>8</td>
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<td>10</td>
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<td>11</td>
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</tr>
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<tr>
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<th class="stub1" scope="row">Non-Hispanic black</th>
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<td>1</td>
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<td>1</td>
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<td>2</td>
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<td>3</td>
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<td>3</td>
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<td>7</td>
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<td>10</td>
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<td>12</td>
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</tr>
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<tr>
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<th class="stub1" scope="row">Hispanic </th>
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<td>1</td>
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<td>1</td>
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<td>2</td>
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<td>2</td>
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<td>3</td>
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|
<td>3</td>
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<td>7</td>
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<td>7</td>
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</tr>
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<tr>
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<th class="stub1" scope="row">Other</th>
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<td>0</td>
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<td>1</td>
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<td>2</td>
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|
<td>2</td>
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|
<td>1</td>
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|
<td>5</td>
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<td>5</td>
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<td>7</td>
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</tr>
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<tr>
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<th class="stub0" scope="rowgroup">Education</th>
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<td colspan="8"></td>
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</tr>
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<tr>
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<th class="stub1" scope="row">High school dropout</th>
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<td>0</td>
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|
<td>1</td>
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<td>1</td>
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|
<td>1</td>
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|
<td>1</td>
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|
<td>2</td>
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<td>4</td>
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<td>6</td>
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</tr>
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<tr>
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<th class="stub1" scope="row">High school graduate</th>
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<td>1</td>
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<td>1</td>
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<td>2</td>
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<td>3</td>
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|
<td>3</td>
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|
<td>7</td>
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|
<td>10</td>
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<td>11</td>
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</tr>
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<tr>
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<th class="stub1" scope="row">College graduate</th>
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<td>1</td>
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<td>1</td>
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<td>2</td>
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<td>3</td>
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|
<td>4</td>
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|
<td>8</td>
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|
<td>10</td>
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<td>12</td>
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</tr>
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<tr>
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<th class="stub0" scope="rowgroup">Labor force experience</th>
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<td colspan="8"></td>
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</tr>
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<tr>
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<th class="stub1" scope="row">Less than 20 years</th>
|
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<td>0</td>
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|
<td>0</td>
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|
<td>1</td>
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|
<td>1</td>
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|
<td>1</td>
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|
<td>1</td>
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|
<td>2</td>
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<td>4</td>
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</tr>
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<tr>
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<th class="stub1" scope="row">20 to 29 years</th>
|
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<td>1</td>
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|
<td>1</td>
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<td>1</td>
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<td>2</td>
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|
<td>2</td>
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|
<td>3</td>
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|
<td>6</td>
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<td>6</td>
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</tr>
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<tr>
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<th class="stub1" scope="row">30 or more years</th>
|
|
<td>1</td>
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|
<td>1</td>
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<td>2</td>
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<td>3</td>
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|
<td>4</td>
|
|
<td>9</td>
|
|
<td>11</td>
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<td>12</td>
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</tr>
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<tr>
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<th class="stub0" scope="rowgroup">Shared lifetime earnings</th>
|
|
<td colspan="8"></td>
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|
</tr>
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<tr>
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<th class="stub1" scope="row">Bottom quintile</th>
|
|
<td>0</td>
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|
<td>0</td>
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|
<td>1</td>
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|
<td>1</td>
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|
<td>1</td>
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|
<td>1</td>
|
|
<td>2</td>
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<td>3</td>
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</tr>
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<tr>
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<th class="stub1" scope="row">2nd quintile </th>
|
|
<td>1</td>
|
|
<td>1</td>
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<td>2</td>
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<td>3</td>
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|
<td>2</td>
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|
<td>4</td>
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<td>6</td>
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<td>8</td>
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|
</tr>
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<tr>
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|
<th class="stub1" scope="row">3rd quintile </th>
|
|
<td>1</td>
|
|
<td>1</td>
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|
<td>2</td>
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|
<td>3</td>
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|
<td>3</td>
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|
<td>8</td>
|
|
<td>10</td>
|
|
<td>12</td>
|
|
</tr>
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<tr>
|
|
<th class="stub1" scope="row">4th quintile </th>
|
|
<td>1</td>
|
|
<td>1</td>
|
|
<td>3</td>
|
|
<td>4</td>
|
|
<td>4</td>
|
|
<td>11</td>
|
|
<td>13</td>
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|
<td>13</td>
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</tr>
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<tr>
|
|
<th class="stub1" scope="row">Top quintile</th>
|
|
<td>2</td>
|
|
<td>2</td>
|
|
<td>2</td>
|
|
<td>3</td>
|
|
<td>5</td>
|
|
<td>12</td>
|
|
<td>15</td>
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|
<td>16</td>
|
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</tr>
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<tr>
|
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<th class="stub0" scope="rowgroup">Income quintile</th>
|
|
<td colspan="8"></td>
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</tr>
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<tr>
|
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<th class="stub1" scope="row">Bottom quintile</th>
|
|
<td>0</td>
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|
<td>1</td>
|
|
<td>1</td>
|
|
<td>2</td>
|
|
<td>1</td>
|
|
<td>1</td>
|
|
<td>2</td>
|
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<td>3</td>
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</tr>
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<tr>
|
|
<th class="stub1" scope="row">2nd quintile </th>
|
|
<td>1</td>
|
|
<td>1</td>
|
|
<td>2</td>
|
|
<td>3</td>
|
|
<td>2</td>
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|
<td>4</td>
|
|
<td>7</td>
|
|
<td>9</td>
|
|
</tr>
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<tr>
|
|
<th class="stub1" scope="row">3rd quintile </th>
|
|
<td>1</td>
|
|
<td>1</td>
|
|
<td>2</td>
|
|
<td>3</td>
|
|
<td>4</td>
|
|
<td>8</td>
|
|
<td>11</td>
|
|
<td>12</td>
|
|
</tr>
|
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<tr>
|
|
<th class="stub1" scope="row">4th quintile </th>
|
|
<td>1</td>
|
|
<td>1</td>
|
|
<td>2</td>
|
|
<td>3</td>
|
|
<td>4</td>
|
|
<td>12</td>
|
|
<td>15</td>
|
|
<td>14</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Top quintile</th>
|
|
<td>1</td>
|
|
<td>1</td>
|
|
<td>1</td>
|
|
<td>2</td>
|
|
<td>5</td>
|
|
<td>10</td>
|
|
<td>12</td>
|
|
<td>15</td>
|
|
</tr>
|
|
</tbody>
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|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="9">SOURCE: Authors' computations of <abbr>MINT</abbr>5 (see text for details).</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="9">NOTE: Sample includes individuals with a change of $10 in per person family income at age 67 between the baseline and <abbr>U.K.</abbr> scenarios. Projections exclude individuals with family wealth in the top 5 percent of the distribution. Shared lifetime earnings is the average of <span class="nobr">wage-indexed</span> shared earnings between ages 22 and 62, where shared earnings are computed by assigning each individual half the total earnings of the couple in the years when the individual is married and his or her own earnings in years when nonmarried. Winners and losers are defined as having a 5 percent or more change in income between the baseline and <abbr>U.K.</abbr> scenarios.</td>
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</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<p>The amounts that winners gain and losers lose at age 67 are generally greater for <span class="nobr">last-wave</span> boomers than those in the <span class="nobr">first-wave</span> because <span class="nobr">last-wave</span> boomers have more years to compound gains or loses in <abbr class="spell">DC</abbr> accounts and accrue benefits in <abbr class="spell">DB</abbr> accounts before reaching age 67. The differences do not monotonically rise by cohort because of the nonlinear <abbr class="spell">DB</abbr> accrual patterns by age. Among winners, average per capita family incomes are projected to increase by $2,100 for <span class="nobr">first-wave</span> boomers and by $2,800 for <span class="nobr">last-wave</span> boomers (Table 9). Among losers, average per capita family incomes are projected to decline by $2,600 for <span class="nobr">first-wave</span> boomers and by $4,200 for <span class="nobr">last-wave</span> boomers (Table 9). Boomers in high socioeconomic groups, who are most likely to have pensions and who have the most benefits at risk, are projected to experience the largest absolute gains and losses, although not necessarily the largest gains and losses as a share of income.<sup><a href="#mn17" id="mt17">17</a></sup> For example, average per capita family income among winners in the last wave of boomers is projected to increase by about $5,800 for those with the highest incomes, but by only about $800 for those with the lowest incomes. In comparison, average per capita family income among losers in the last wave of boomers is projected to decline by about $8,000 for those with the highest incomes, but by only about $700 for those with the lowest incomes.</p>
|
|
<div class="table" id="table9">
|
|
<table>
|
|
<caption><span class="tableNumber">Table 9. </span>Change in mean family income per person at age 67 for winners and losers between the baseline and <abbr>U.K.</abbr> scenarios, by selected characteristics (in thousands of 2007 dollars)</caption>
|
|
<colgroup span="1" style="width:15em"></colgroup>
|
|
<colgroup span="4" style="width:6em"></colgroup>
|
|
<colgroup span="4" style="width:6em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" rowspan="2" scope="colgroup">Characteristic</th>
|
|
<th class="spanner" colspan="4" scope="colgroup">Winners</th>
|
|
<th class="spanner" colspan="4" scope="colgroup">Losers</th>
|
|
</tr>
|
|
<tr>
|
|
<th scope="col">First boomers <span class="nobr">(1946–1950)</span></th>
|
|
<th scope="col">Second boomers <span class="nobr">(1951–1955)</span></th>
|
|
<th scope="col">Third boomers <span class="nobr">(1956–1960)</span></th>
|
|
<th scope="col">Last boomers <span class="nobr">(1961–1965)</span></th>
|
|
<th scope="col">First boomers <span class="nobr">(1946–1950)</span></th>
|
|
<th scope="col">Second boomers <span class="nobr">(1951–1955)</span></th>
|
|
<th scope="col">Third boomers <span class="nobr">(1956–1960)</span></th>
|
|
<th scope="col">Last boomers <span class="nobr">(1961–1965)</span></th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub2" scope="row">All</th>
|
|
<td>2.1</td>
|
|
<td>1.8</td>
|
|
<td>1.8</td>
|
|
<td>2.8</td>
|
|
<td>-2.6</td>
|
|
<td>-3.7</td>
|
|
<td>-4.2</td>
|
|
<td>-4.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Sex</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Women</th>
|
|
<td>2.0</td>
|
|
<td>2.1</td>
|
|
<td>1.7</td>
|
|
<td>3.0</td>
|
|
<td>-2.6</td>
|
|
<td>-3.6</td>
|
|
<td>-4.0</td>
|
|
<td>-4.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Men</th>
|
|
<td>2.1</td>
|
|
<td>1.5</td>
|
|
<td>1.8</td>
|
|
<td>2.5</td>
|
|
<td>-2.5</td>
|
|
<td>-3.9</td>
|
|
<td>-4.3</td>
|
|
<td>-4.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Marital status</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Never married</th>
|
|
<td>3.8</td>
|
|
<td>1.4</td>
|
|
<td>2.7</td>
|
|
<td>4.7</td>
|
|
<td>-2.5</td>
|
|
<td>-5.3</td>
|
|
<td>-6.2</td>
|
|
<td>-6.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Married</th>
|
|
<td>2.1</td>
|
|
<td>1.5</td>
|
|
<td>1.5</td>
|
|
<td>2.3</td>
|
|
<td>-2.4</td>
|
|
<td>-3.3</td>
|
|
<td>-3.5</td>
|
|
<td>-3.8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Widowed</th>
|
|
<td>1.3</td>
|
|
<td>4.8</td>
|
|
<td>1.8</td>
|
|
<td>4.1</td>
|
|
<td>-3.0</td>
|
|
<td>-4.7</td>
|
|
<td>-4.8</td>
|
|
<td>-5.5</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Divorced</th>
|
|
<td>1.7</td>
|
|
<td>1.9</td>
|
|
<td>2.9</td>
|
|
<td>3.6</td>
|
|
<td>-3.3</td>
|
|
<td>-4.7</td>
|
|
<td>-5.9</td>
|
|
<td>-5.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Race/ethnicity</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Non-Hispanic white</th>
|
|
<td>2.1</td>
|
|
<td>1.9</td>
|
|
<td>1.7</td>
|
|
<td>3.0</td>
|
|
<td>-2.7</td>
|
|
<td>-3.8</td>
|
|
<td>-4.3</td>
|
|
<td>-4.5</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Non-Hispanic black</th>
|
|
<td>3.2</td>
|
|
<td>1.5</td>
|
|
<td>3.3</td>
|
|
<td>1.6</td>
|
|
<td>-1.8</td>
|
|
<td>-3.9</td>
|
|
<td>-4.2</td>
|
|
<td>-4.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Hispanic </th>
|
|
<td>1.6</td>
|
|
<td>1.1</td>
|
|
<td>1.2</td>
|
|
<td>2.7</td>
|
|
<td>-2.2</td>
|
|
<td>-1.6</td>
|
|
<td>-2.9</td>
|
|
<td>-2.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Other</th>
|
|
<td>0.8</td>
|
|
<td>2.0</td>
|
|
<td>2.0</td>
|
|
<td>1.7</td>
|
|
<td>-1.6</td>
|
|
<td>-4.2</td>
|
|
<td>-4.3</td>
|
|
<td>-3.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Education</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">High school dropout</th>
|
|
<td>1.0</td>
|
|
<td>1.3</td>
|
|
<td>1.1</td>
|
|
<td>1.0</td>
|
|
<td>-1.5</td>
|
|
<td>-1.7</td>
|
|
<td>-2.1</td>
|
|
<td>-2.8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">High school graduate</th>
|
|
<td>1.4</td>
|
|
<td>1.6</td>
|
|
<td>1.3</td>
|
|
<td>2.1</td>
|
|
<td>-1.9</td>
|
|
<td>-3.0</td>
|
|
<td>-3.3</td>
|
|
<td>-3.4</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">College graduate</th>
|
|
<td>3.1</td>
|
|
<td>2.2</td>
|
|
<td>2.9</td>
|
|
<td>4.7</td>
|
|
<td>-3.8</td>
|
|
<td>-5.6</td>
|
|
<td>-6.7</td>
|
|
<td>-6.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Labor force experience</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Less than 20 years</th>
|
|
<td>0.9</td>
|
|
<td>1.3</td>
|
|
<td>1.3</td>
|
|
<td>1.1</td>
|
|
<td>-3.1</td>
|
|
<td>-2.5</td>
|
|
<td>-3.3</td>
|
|
<td>-3.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">20 to 29 years</th>
|
|
<td>2.5</td>
|
|
<td>1.4</td>
|
|
<td>0.8</td>
|
|
<td>1.4</td>
|
|
<td>-2.2</td>
|
|
<td>-2.6</td>
|
|
<td>-3.1</td>
|
|
<td>-2.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">30 or more years</th>
|
|
<td>2.1</td>
|
|
<td>1.8</td>
|
|
<td>1.9</td>
|
|
<td>3.0</td>
|
|
<td>-2.6</td>
|
|
<td>-3.8</td>
|
|
<td>-4.3</td>
|
|
<td>-4.4</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Shared lifetime earnings</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Bottom quintile</th>
|
|
<td>1.9</td>
|
|
<td>0.5</td>
|
|
<td>0.5</td>
|
|
<td>0.7</td>
|
|
<td>-1.5</td>
|
|
<td>-1.2</td>
|
|
<td>-1.6</td>
|
|
<td>-2.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">2nd quintile </th>
|
|
<td>0.8</td>
|
|
<td>0.6</td>
|
|
<td>1.2</td>
|
|
<td>1.3</td>
|
|
<td>-1.5</td>
|
|
<td>-1.6</td>
|
|
<td>-1.8</td>
|
|
<td>-2.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">3rd quintile </th>
|
|
<td>1.6</td>
|
|
<td>1.1</td>
|
|
<td>1.1</td>
|
|
<td>1.4</td>
|
|
<td>-1.8</td>
|
|
<td>-2.5</td>
|
|
<td>-2.8</td>
|
|
<td>-3.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">4th quintile </th>
|
|
<td>1.8</td>
|
|
<td>2.2</td>
|
|
<td>2.5</td>
|
|
<td>3.1</td>
|
|
<td>-2.5</td>
|
|
<td>-3.8</td>
|
|
<td>-4.0</td>
|
|
<td>-4.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Top quintile</th>
|
|
<td>3.1</td>
|
|
<td>3.1</td>
|
|
<td>2.7</td>
|
|
<td>6.4</td>
|
|
<td>-3.9</td>
|
|
<td>-6.1</td>
|
|
<td>-7.5</td>
|
|
<td>-7.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" scope="rowgroup">Income quintile</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Bottom quintile</th>
|
|
<td>0.9</td>
|
|
<td>0.7</td>
|
|
<td>0.7</td>
|
|
<td>0.8</td>
|
|
<td>-0.6</td>
|
|
<td>-0.7</td>
|
|
<td>-0.6</td>
|
|
<td>-0.7</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">2nd quintile </th>
|
|
<td>2.1</td>
|
|
<td>0.6</td>
|
|
<td>1.1</td>
|
|
<td>1.4</td>
|
|
<td>-1.0</td>
|
|
<td>-1.2</td>
|
|
<td>-1.6</td>
|
|
<td>-1.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">3rd quintile </th>
|
|
<td>1.3</td>
|
|
<td>1.7</td>
|
|
<td>1.4</td>
|
|
<td>2.2</td>
|
|
<td>-1.5</td>
|
|
<td>-2.2</td>
|
|
<td>-2.5</td>
|
|
<td>-2.7</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">4th quintile </th>
|
|
<td>1.7</td>
|
|
<td>1.7</td>
|
|
<td>2.3</td>
|
|
<td>3.1</td>
|
|
<td>-2.2</td>
|
|
<td>-3.7</td>
|
|
<td>-4.2</td>
|
|
<td>-4.4</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" scope="row">Top quintile</th>
|
|
<td>3.1</td>
|
|
<td>3.3</td>
|
|
<td>2.5</td>
|
|
<td>5.8</td>
|
|
<td>-4.6</td>
|
|
<td>-6.8</td>
|
|
<td>-8.2</td>
|
|
<td>-8.0</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="9">SOURCE: Authors' computations of <abbr>MINT</abbr>5 (see text for details).</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="9">NOTE: Projections exclude individuals with family wealth in the top 5 percent of the distribution. Shared lifetime earnings is the average of <span class="nobr">wage-indexed</span> shared earnings between ages 22 and 62, where shared earnings are computed by assigning each individual half the total earnings of the couple in the years when the individual is married and his or her own earnings in years when nonmarried. Winners and losers are defined as having at least a $10 change in income between the baseline and <abbr>U.K.</abbr> scenarios.</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<h3>What is Driving the Outcomes?</h3>
|
|
<p>Retirement incomes may increase under the <abbr>U.K.</abbr> scenario for several reasons. First, some workers may increase their <abbr class="spell">DC</abbr> contributions or earn above average returns on their <abbr class="spell">DC</abbr> retirement accounts, boosting their wealth relative to what they would accrue in <abbr class="spell">DB</abbr> plans. Second, some workers increase accruals in <abbr class="spell">DB</abbr> accounts because they become vested when plans are frozen.<sup><a href="#mn18" id="mt18">18</a></sup> Third, some workers whose <abbr class="spell">DB</abbr> plans are frozen or who never acquire <abbr class="spell">DB</abbr> coverage may delay retirement and work longer because <abbr class="spell">DC</abbr> pensions, unlike <abbr class="spell">DB</abbr> pensions, do not encourage early retirement (Butrica and others 2006). Indeed, we find that winners are projected to have higher per capita family earnings and slightly higher Social Security benefits under the <abbr>U.K.</abbr> scenario than under the baseline because of delayed retirement (Table 10).</p>
|
|
<div class="table" id="table10">
|
|
<table>
|
|
<caption><span class="tableNumber">Table 10. </span>Mean family income per person at age 67 for winners and losers, by income source (in thousands of 2007 dollars)</caption>
|
|
<colgroup span="1" style="width:15em"></colgroup>
|
|
<colgroup span="8" style="width:6em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" rowspan="2" id="c1">Income source</th>
|
|
<th class="spanner" colspan="4" id="c2">Baseline</th>
|
|
<th class="spanner" colspan="4" id="c3">Difference between baseline and <abbr>U.K.</abbr> scenarios</th>
|
|
</tr>
|
|
<tr>
|
|
<th id="c4" headers="c2">First boomers <span class="nobr">(1946–1950)</span></th>
|
|
<th id="c5" headers="c2">Second boomers <span class="nobr">(1951–1955)</span></th>
|
|
<th id="c6" headers="c2">Third boomers <span class="nobr">(1956–1960)</span></th>
|
|
<th id="c7" headers="c2">Last boomers <span class="nobr">(1961–1965)</span></th>
|
|
<th id="c8" headers="c3">First boomers <span class="nobr">(1946–1950)</span></th>
|
|
<th id="c9" headers="c3">Second boomers <span class="nobr">(1951–1955)</span></th>
|
|
<th id="c10" headers="c3">Third boomers <span class="nobr">(1956–1960)</span></th>
|
|
<th id="c11" headers="c3">Last boomers <span class="nobr">(1961–1965)</span></th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub0" id="r1" headers="c1">Winners </th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r2" headers="r1 c1">Income from assets</th>
|
|
<td headers="r1 r2 c2 c4">8.6</td>
|
|
<td headers="r1 r2 c2 c5">7.9</td>
|
|
<td headers="r1 r2 c2 c6">7.9</td>
|
|
<td headers="r1 r2 c2 c7">7.3</td>
|
|
<td headers="r1 r2 c3 c8">0.0</td>
|
|
<td headers="r1 r2 c3 c9">0.0</td>
|
|
<td headers="r1 r2 c3 c10">-0.1</td>
|
|
<td headers="r1 r2 c3 c11">-0.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r3" headers="r1 c1">Earnings</th>
|
|
<td headers="r1 r3 c2 c4">19.4</td>
|
|
<td headers="r1 r3 c2 c5">14.1</td>
|
|
<td headers="r1 r3 c2 c6">11.8</td>
|
|
<td headers="r1 r3 c2 c7">13.3</td>
|
|
<td headers="r1 r3 c3 c8">0.5</td>
|
|
<td headers="r1 r3 c3 c9">0.5</td>
|
|
<td headers="r1 r3 c3 c10">0.6</td>
|
|
<td headers="r1 r3 c3 c11">1.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r4" headers="r1 c1"><abbr class="spell">SSI</abbr> payments</th>
|
|
<td headers="r1 r4 c2 c4">0.0</td>
|
|
<td headers="r1 r4 c2 c5">0.0</td>
|
|
<td headers="r1 r4 c2 c6">0.0</td>
|
|
<td headers="r1 r4 c2 c7">0.0</td>
|
|
<td headers="r1 r4 c3 c8">0.0</td>
|
|
<td headers="r1 r4 c3 c9">0.0</td>
|
|
<td headers="r1 r4 c3 c10">0.0</td>
|
|
<td headers="r1 r4 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r5" headers="r1 c1">Imputed rental income</th>
|
|
<td headers="r1 r5 c2 c4">3.7</td>
|
|
<td headers="r1 r5 c2 c5">3.5</td>
|
|
<td headers="r1 r5 c2 c6">3.2</td>
|
|
<td headers="r1 r5 c2 c7">2.9</td>
|
|
<td headers="r1 r5 c3 c8">0.0</td>
|
|
<td headers="r1 r5 c3 c9">0.0</td>
|
|
<td headers="r1 r5 c3 c10">0.0</td>
|
|
<td headers="r1 r5 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r6" headers="r1 c1">Social Security benefits</th>
|
|
<td headers="r1 r6 c2 c4">14.4</td>
|
|
<td headers="r1 r6 c2 c5">14.4</td>
|
|
<td headers="r1 r6 c2 c6">13.9</td>
|
|
<td headers="r1 r6 c2 c7">13.7</td>
|
|
<td headers="r1 r6 c3 c8">0.0</td>
|
|
<td headers="r1 r6 c3 c9">0.0</td>
|
|
<td headers="r1 r6 c3 c10">0.1</td>
|
|
<td headers="r1 r6 c3 c11">0.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r7" headers="r1 c1"><abbr class="spell">DB</abbr> pension benefits</th>
|
|
<td headers="r1 r7 c2 c4">8.3</td>
|
|
<td headers="r1 r7 c2 c5">4.9</td>
|
|
<td headers="r1 r7 c2 c6">4.1</td>
|
|
<td headers="r1 r7 c2 c7">2.9</td>
|
|
<td headers="r1 r7 c3 c8">1.1</td>
|
|
<td headers="r1 r7 c3 c9">0.5</td>
|
|
<td headers="r1 r7 c3 c10">-0.1</td>
|
|
<td headers="r1 r7 c3 c11">-0.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r8" headers="r1 c1">Retirement accounts</th>
|
|
<td headers="r1 r8 c2 c4">9.4</td>
|
|
<td headers="r1 r8 c2 c5">9.1</td>
|
|
<td headers="r1 r8 c2 c6">9.7</td>
|
|
<td headers="r1 r8 c2 c7">9.5</td>
|
|
<td headers="r1 r8 c3 c8">0.4</td>
|
|
<td headers="r1 r8 c3 c9">0.8</td>
|
|
<td headers="r1 r8 c3 c10">1.3</td>
|
|
<td headers="r1 r8 c3 c11">2.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub2" id="r9" headers="r1 r8 c1">Total income</th>
|
|
<td headers="r1 r8 r9 c2 c4">63.9</td>
|
|
<td headers="r1 r8 r9 c2 c5">53.8</td>
|
|
<td headers="r1 r8 r9 c2 c6">50.6</td>
|
|
<td headers="r1 r8 r9 c2 c7">49.5</td>
|
|
<td headers="r1 r8 r9 c3 c8">2.1</td>
|
|
<td headers="r1 r8 r9 c3 c9">1.8</td>
|
|
<td headers="r1 r8 r9 c3 c10">1.8</td>
|
|
<td headers="r1 r8 r9 c3 c11">2.8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r10" headers="c1">Losers</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r11" headers="r10 c1">Income from assets</th>
|
|
<td headers="r10 r11 c2 c4">7.6</td>
|
|
<td headers="r10 r11 c2 c5">8.0</td>
|
|
<td headers="r10 r11 c2 c6">8.4</td>
|
|
<td headers="r10 r11 c2 c7">9.4</td>
|
|
<td headers="r10 r11 c3 c8">0.0</td>
|
|
<td headers="r10 r11 c3 c9">0.0</td>
|
|
<td headers="r10 r11 c3 c10">0.0</td>
|
|
<td headers="r10 r11 c3 c11">-0.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r12" headers="r10 c1">Earnings</th>
|
|
<td headers="r10 r12 c2 c4">14.8</td>
|
|
<td headers="r10 r12 c2 c5">11.0</td>
|
|
<td headers="r10 r12 c2 c6">10.7</td>
|
|
<td headers="r10 r12 c2 c7">11.3</td>
|
|
<td headers="r10 r12 c3 c8">0.0</td>
|
|
<td headers="r10 r12 c3 c9">-0.1</td>
|
|
<td headers="r10 r12 c3 c10">-0.1</td>
|
|
<td headers="r10 r12 c3 c11">-0.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r13" headers="r10 c1"><abbr class="spell">SSI</abbr> payments</th>
|
|
<td headers="r10 r13 c2 c4">0.0</td>
|
|
<td headers="r10 r13 c2 c5">0.0</td>
|
|
<td headers="r10 r13 c2 c6">0.0</td>
|
|
<td headers="r10 r13 c2 c7">0.0</td>
|
|
<td headers="r10 r13 c3 c8">0.0</td>
|
|
<td headers="r10 r13 c3 c9">0.0</td>
|
|
<td headers="r10 r13 c3 c10">0.0</td>
|
|
<td headers="r10 r13 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r14" headers="r10 c1">Imputed rental income</th>
|
|
<td headers="r10 r14 c2 c4">3.7</td>
|
|
<td headers="r10 r14 c2 c5">3.5</td>
|
|
<td headers="r10 r14 c2 c6">3.4</td>
|
|
<td headers="r10 r14 c2 c7">3.6</td>
|
|
<td headers="r10 r14 c3 c8">0.0</td>
|
|
<td headers="r10 r14 c3 c9">0.0</td>
|
|
<td headers="r10 r14 c3 c10">0.0</td>
|
|
<td headers="r10 r14 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r15" headers="r10 c1">Social Security benefits</th>
|
|
<td headers="r10 r15 c2 c4">15.4</td>
|
|
<td headers="r10 r15 c2 c5">15.8</td>
|
|
<td headers="r10 r15 c2 c6">15.3</td>
|
|
<td headers="r10 r15 c2 c7">15.3</td>
|
|
<td headers="r10 r15 c3 c8">0.0</td>
|
|
<td headers="r10 r15 c3 c9">0.0</td>
|
|
<td headers="r10 r15 c3 c10">0.0</td>
|
|
<td headers="r10 r15 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r16" headers="r10 c1"><abbr class="spell">DB</abbr> pension benefits</th>
|
|
<td headers="r10 r16 c2 c4">11.6</td>
|
|
<td headers="r10 r16 c2 c5">10.2</td>
|
|
<td headers="r10 r16 c2 c6">8.4</td>
|
|
<td headers="r10 r16 c2 c7">7.2</td>
|
|
<td headers="r10 r16 c3 c8">-2.6</td>
|
|
<td headers="r10 r16 c3 c9">-3.8</td>
|
|
<td headers="r10 r16 c3 c10">-4.3</td>
|
|
<td headers="r10 r16 c3 c11">-4.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r17" headers="r10 c1">Retirement accounts</th>
|
|
<td headers="r10 r17 c2 c4">11.3</td>
|
|
<td headers="r10 r17 c2 c5">11.8</td>
|
|
<td headers="r10 r17 c2 c6">12.1</td>
|
|
<td headers="r10 r17 c2 c7">12.1</td>
|
|
<td headers="r10 r17 c3 c8">0.1</td>
|
|
<td headers="r10 r17 c3 c9">0.2</td>
|
|
<td headers="r10 r17 c3 c10">0.3</td>
|
|
<td headers="r10 r17 c3 c11">0.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub2" id="r18" headers="r10 r17 c1">Total income</th>
|
|
<td headers="r10 r17 r18 c2 c4">64.4</td>
|
|
<td headers="r10 r17 r18 c2 c5">60.3</td>
|
|
<td headers="r10 r17 r18 c2 c6">58.3</td>
|
|
<td headers="r10 r17 r18 c2 c7">58.9</td>
|
|
<td headers="r10 r17 r18 c3 c8">-2.6</td>
|
|
<td headers="r10 r17 r18 c3 c9">-3.7</td>
|
|
<td headers="r10 r17 r18 c3 c10">-4.2</td>
|
|
<td headers="r10 r17 r18 c3 c11">-4.2</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="9">SOURCE: Authors' computations of <abbr>MINT</abbr>5 (see text for details).</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="9">NOTE: Projections exclude individuals with family wealth in the top 5 percent of the distribution. Winners and losers are defined as having at least a $10 change in income between the baseline and <abbr>U.K.</abbr> scenarios.</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<p>Overall, winners among first- and <span class="nobr">second-wave</span> boomers experience increases in income from both <abbr class="spell">DB</abbr> pensions and <abbr class="spell">DC</abbr> retirement accounts. In contrast, winners among third- and <span class="nobr">last-wave</span> boomers experience losses in their <abbr class="spell">DB</abbr> pensions and increases in their <abbr class="spell">DC</abbr> retirement accounts, with income losses in <abbr class="spell">DB</abbr> pensions being much smaller than income gains in <abbr class="spell">DC</abbr> retirement accounts.</p>
|
|
<p>For those whose family incomes decline under the <abbr>U.K.</abbr> scenario, the reduction is driven almost totally by a reduction in <abbr class="spell">DB</abbr> benefits. Losers experience much larger <abbr class="spell">DB</abbr> pension losses under the <abbr>U.K.</abbr> scenario than winners, but have very modest increases in income from retirement account balances, compared with winners. Losers, compared with winners, also have much more retirement wealth under the baseline and thus have much more to lose from a change in pension coverage. Their average per capita family <abbr class="spell">DB</abbr> pensions range from 1.4 to 2.5 times higher than those of winners, but they are also projected to have average per capita family <abbr class="spell">DC</abbr> retirement accounts that are 1.2 to 1.3 times higher than those of winners. For all boomers projected to lose income, the increase in <abbr class="spell">DC</abbr> retirement accounts offsets less than 6 percent of the decline in <abbr class="spell">DB</abbr> pension benefits. This huge ratio of <abbr class="spell">DB</abbr> benefit losses to <abbr class="spell">DC</abbr> benefit gains could occur for a variety of reasons, including the loss of <span class="nobr">high-accruing</span> years in <abbr class="spell">DB</abbr> plans, low participation or contribution rates in the new <abbr class="spell">DC</abbr> retirement accounts, or lower than average investment returns on retirement account assets.<sup><a href="#mn19" id="mt19">19</a></sup></p>
|
|
<h2>Conclusions</h2>
|
|
<p>In recent years, the United States has seen a significant shift away from <abbr class="spell">DB</abbr> pension plans to <abbr class="spell">DC</abbr> plans. This shift may accelerate rapidly as more large companies, even those with financially solvent plans, freeze their <abbr class="spell">DB</abbr> plans and replace them with new or enhanced <abbr class="spell">DC</abbr> plans. A dramatic shift away from <abbr class="spell">DB</abbr> plans, as has happened among private-sector <abbr class="spell">DB</abbr> plans in the United Kingdom, would produce both losers and winners among future boomer retirees. On balance, there would be more losers than winners and average family incomes would decline. The decline in family income is expected to be much larger for <span class="nobr">last-wave</span> boomers born from 1961 to 1965 than for <span class="nobr">first-wave</span> boomers born from 1946 to 1950, because <span class="nobr">last-wave</span> boomers are more likely to have their <abbr class="spell">DB</abbr> pensions frozen with relatively little job tenure. We project that 26 percent of <span class="nobr">last-wave</span> boomers would have lower family incomes at age 67, and 10 percent of them would experience at least a 5 percent decline. Although retirement incomes would increase for some families under the alternative pension scenario, only 11 percent of the <span class="nobr">last-wave</span> boomers would see their incomes increase, and only 3 percent would experience a gain of 5 percent or more.</p>
|
|
<p>Demographic groups most likely to have pensions under the baseline scenario are projected to be those most affected by the accelerated freezing of <abbr class="spell">DB</abbr> plans, namely non-Hispanic whites, college graduates, those with many years of work experience, and those in the highest lifetime earnings and retirement income quintiles. Because the groups most likely to have <abbr class="spell">DB</abbr> plans have the most income at risk but also the largest potential gains from substituting <abbr class="spell">DB</abbr> pensions with additional <abbr class="spell">DC</abbr> wealth, they are projected to experience both the largest losses and the largest gains from the pension transition. For example, average per capita family income among losers in the last wave of boomers is projected to decline by $8,000 for those with the highest incomes, compared with only $700 for those with the lowest incomes. Also, average per capita family income among winners in the last wave of boomers is projected to increase by $5,800 for those with the highest incomes, but by only $800 for those with the lowest incomes.</p>
|
|
<p><span class="nobr">Last-wave</span> boomers are more likely than their predecessors to be high school dropouts, minority, and unmarried—characteristics that are associated with low earnings during working years and economic vulnerability in retirement. But these groups are less likely to have pensions in any form and therefore are much less affected by the shift from <abbr class="spell">DB</abbr> to <abbr class="spell">DC</abbr> plans. It is likely, however, that a future with fewer <abbr class="spell">DB</abbr> plans will generate a new class of economically vulnerable retirees among formerly better-off retirees who were relying on their <abbr class="spell">DB</abbr> pension income but now, through either bad luck or poor planning, will end up with insufficient resources in retirement.</p>
|
|
<p>The net decline in retirement income among boomer cohorts that results from substituting ongoing <abbr class="spell">DB</abbr> plans with frozen <abbr class="spell">DB</abbr> plans combined with improved <abbr class="spell">DC</abbr> plans is to some degree a transitory phenomenon. If people are to participate in <abbr class="spell">DB</abbr> and <abbr class="spell">DC</abbr> plans at different times during their working careers, the worst scenario for them is to hold a <abbr class="spell">DB</abbr> plan early in their career and a <abbr class="spell">DC</abbr> plan late in their career. When workers switch from <abbr class="spell">DB</abbr> to <abbr class="spell">DC</abbr> plans in midcareer, they lose the high-accrual years in their <abbr class="spell">DB</abbr> plans and have fewer years to accumulate <abbr class="spell">DC</abbr> wealth. Compared with retirement outcomes under this scenario, most workers would be better off participating in either a <abbr class="spell">DB</abbr> or <abbr class="spell">DC</abbr> plan during their entire career. More than any other birth cohort, the boomer cohorts will experience the transition from <abbr class="spell">DB</abbr> to <abbr class="spell">DC</abbr> plans in midcareer and, as our simulations show, on average suffer declines in their projected retirement incomes. Generation-Xers and those who come later may fare better depending on participation rates, contribution rates, and market returns.</p>
|
|
<p>The <span class="nobr">build-up</span> of retirement assets is a complex process that varies with earnings, family changes, job changes, health status, individual choices, and fluctuations in housing and stock prices, among other factors. Policymakers need to know the impact of significant shifts in pension provisions on retirement <span class="nobr">well-being</span> so that they can assess the alternative policy options of <span class="nobr">shoring-up</span> <abbr class="spell">DB</abbr> plans before those plans disappear or letting them slowly fade away, while focusing on ways to encourage higher participation rates and sounder investment choices within <abbr class="spell">DC</abbr> plans. In particular, if stock market declines close to retirement age cause significant losses in <abbr class="spell">DC</abbr> retirement accounts for some investors, policymakers may want to develop mechanisms to reduce risk in retirement assets. As more workers enter retirement with assets held outside of annuities, policymakers could also develop options to encourage people to use their increased retirement wealth to purchase annuities instead of spending it down rapidly. Finally, as policymakers consider proposals to improve the solvency of the Social Security system, they must recognize that the shift from <abbr class="spell">DB</abbr> to <abbr class="spell">DC</abbr> pensions means that Social Security will increasingly become the only source of guaranteed lifetime benefits of which most retirees can rely.</p>
|
|
<h2 id="appendixA">Appendix A</h2>
|
|
<p><abbr>MINT</abbr> begins with pooled <abbr>SIPP</abbr> data from 1990 to 1996. The 1990 to 1993 panels include individuals born from 1926 to 1965. The 1996 panel includes individuals born from 1926 to 1972. Using a cloning process, <abbr>MINT</abbr> also creates individuals born from 1973 to 2018 and immigrants that arrive after 1996.</p>
|
|
<p>The <abbr>SIPP</abbr> data include numerous demographic characteristics, including marriage history, migration history, health and disability status, and the number and relationships of people in the household. The <abbr>SIPP</abbr> also contains detailed income and wealth characteristics such as home equity, financial assets, pension characteristics and assets, Social Security benefits and <abbr class="spell">SSI</abbr> payments, and income from wages and salaries, self-employment, and pensions.</p>
|
|
<p><abbr>MINT</abbr> uses earnings from Social Security administrative data for the years 1951 through 2004 for individuals with a valid Social Security number, matched to the <span class="nobr">1990–1993</span> and 1996 <abbr>SIPP</abbr> panels. The model statistically imputes an earnings record for all nonmatched respondents by selecting a similar respondent with a valid match. Matching variables in this imputation include age, sex, education, self-reported <abbr>SIPP</abbr> earnings, immigration age, and deferred contribution pension status.</p>
|
|
<p><abbr>MINT</abbr> then projects annual earnings and disability onset through age 67 using a "nearest neighbor" matching procedure. The model starts with a person's own <abbr class="spell">SSA</abbr>-recorded earnings from 1951 to 2004. The nearest neighbor procedure statistically assigns to each "recipient" worker the next 5 years of earnings and <abbr class="spell">DI</abbr> entitlement status, based on the earnings and <abbr class="spell">DI</abbr> status of a "donor" <abbr>MINT</abbr> observation born 5 years earlier with similar characteristics. The splicing of <span class="nobr">5-year</span> blocks of earnings from donors to recipients continues until earnings projections reach age 67. A number of criteria are used to match recipients with donors in the same age interval. These criteria include sex, minority group status, education level, <abbr class="spell">DI</abbr> entitlement status, self-employment status, average earnings over the prior <span class="nobr">5-year</span> period, presence of earnings in the 4th and 5th years of the prior <span class="nobr">5-year</span> period, and age/sex group quintile of average prematch period earnings. An advantage of this approach is that it preserves the observed heterogeneity in age/earnings profiles for earlier birth cohorts in projecting earnings of later cohorts.</p>
|
|
<p>In a subsequent process, for all individuals who never become <abbr class="spell">DI</abbr> recipients, <abbr>MINT</abbr> projects earnings, retirement, and benefit <span class="nobr">take-up</span> from age 55 until death. These earnings replace the earnings generated from the splicing method from age 55 until retirement. This postprocess allows the model to project behavioral changes in earnings, retirement, and benefit <span class="nobr">take-up</span> in response to policy changes. <abbr>MINT</abbr> then calculates Social Security benefits based on earnings histories and <abbr class="spell">DI</abbr> entitlement status of workers, marital histories, and earnings histories of current and former spouses.</p>
|
|
<p>Social Security benefits in <abbr>MINT</abbr> are calculated using a detailed Social Security benefit calculator. <abbr>MINT</abbr>'s calculated benefits use earnings from the Summary Earnings Record and should generate actual benefits from the Master Beneficiary Record. Calculated and actual benefits will not match in cases when the benefits are based on a former spouse. <abbr>MINT</abbr> selects former spouses (where earnings histories are available), and to ensure consistency in benefits with earnings and spouse characteristics, it uses calculated Social Security benefits. <abbr>MINT</abbr>'s benefits are based on <span class="nobr">full-year</span> values even in the first year of benefit <span class="nobr">take-up</span>. The actuarial reduction factor accounts for the age in months at <span class="nobr">take-up</span>, but there is no adjustment in annual benefits for <span class="nobr">part-year</span> receipt.</p>
|
|
<p><abbr>MINT</abbr> projects pension coverage and benefits starting with the self-reported pension coverage information in the <abbr>SIPP</abbr>. It then links individuals to pension plans and simulates new pension plans along with job changes. Pension accruals depend on the characteristics of individuals' specific pension plan parameters and simulated job tenure. The model also projects wealth from <abbr class="spell">DC</abbr> retirement accounts (that is—defined contribution plans, individual retirement accounts, and Keogh plans) to the retirement date based on initial account balances and projected new contributions and investment earnings.</p>
|
|
<p>This simulation model also projects housing equity and nonpension, nonhousing wealth (that is—vehicle, other real estate, and farm and business equity; stock, mutual fund, and bond values; checking, saving, money market, and certificate of deposit account balances—less unsecured debt). These projections are based on random-effects models of wealth accumulation estimated from the Panel Survey of Income Dynamics, the Health and Retirement Study, and the Survey of Income and Program Participation. Explanatory variables include age, recent earnings and present value of lifetime earnings, number of years with earnings above the Social Security taxable maximum, marital status, sex, number and age of children, education, race, health and disability status, pension coverage, self-employment status, and last year of life.</p>
|
|
<p>In addition, <abbr>MINT</abbr> also projects living arrangements, <abbr class="spell">SSI</abbr> payments, and income of nonspouse <span class="nobr">co-residents</span> from age 62 until death. Living arrangements depend on marital status, age, sex, race, ethnicity, nativity, number of children ever born, education, income and assets of the individual, and date of death. For those projected to <span class="nobr">co-reside,</span> <abbr>MINT</abbr> uses a "nearest neighbor" match to assign the income and characteristics of the other family members from a "donor" file of co-resident families from pooled 1990 to 1993 <abbr>SIPP</abbr> panels. After all incomes and assets are calculated, <abbr>MINT</abbr> calculates <abbr class="spell">SSI</abbr> eligibility and projects participation and payments for eligible participants.</p>
|
|
<p>Finally, <abbr>MINT</abbr> calculates annual state and federal income taxes from federal and state tax calculators and additional data from a statistical match with an enhanced Statistics of Income (<abbr class="spell">SOI</abbr>) file. The statistical match uses a minimum distance function. The key match variables are filing status, age of family head, wage and salary earnings, self-employment earnings, pension income, Social Security benefits, home equity, and financial assets. The enhanced <abbr class="spell">SOI</abbr> is used as the data source for interest, dividends, rental income, and itemized deductions; these variables are needed to calculate income tax liabilities.</p>
|
|
<p>The enhanced <abbr class="spell">SOI</abbr> file used with <abbr>MINT</abbr> is based on the 2001 <abbr class="spell">SOI</abbr> file that is statistically matched to the 1996 <abbr>SIPP</abbr> to add home equity, financial assets, and age. This match uses a minimum distance function that includes filing status, state, number of exemptions, wage and salary income, self-employment income, Social Security income, pension income, individual retirement account distributions, interest, dividends, rental income, alimony, and unemployment compensation.</p>
|
|
<p>This report calculates asset income based on the annuity that families could purchase from 80 percent of financial assets. <abbr>MINT</abbr> uses this annuity income to calculate retirement income; not the <abbr class="spell">SOI</abbr> imputed interest, dividends, and rental income. The model uses the potential annuity instead of capital income from assets as an income measure to treat families with <abbr class="spell">DC</abbr> pensions in a manner comparable to that of families with <abbr class="spell">DB</abbr> pensions. The potential annuity amount will exceed the return on capital—interest, dividends, and rental income—because the annuity includes repayment of principal in addition to capital income. This places the measured income from <abbr class="spell">DC</abbr> accounts on an equivalent scale with reported <abbr class="spell">DB</abbr> pension income, which includes both the return on assets and repayment of principal.</p>
|
|
<p>Finally, <abbr>MINT</abbr> projects income and demographic transitions annually from the <abbr>SIPP</abbr> interview year until the earlier of emigration, institutionalization, death, or 2099. The earnings and benefit status come directly from the administrative data through 2004. Per capita income and assets depend on economic and demographic variable (marriage, divorce, and death) changes over the period.</p>
|
|
<h2>Appendix B</h2>
|
|
<p>Table B-1 expresses the average change in mean per person family income as a percent rather than as a dollar value for winners and losers. Tables B-2 and B-3 estimate the income levels and amount of change for winners and losers, respectively, by the level of percent change in income.</p>
|
|
<div class="table" id="tableB1">
|
|
<table>
|
|
<caption><span class="tableNumber">Table B-1. </span>Percent change in mean per person family income at age 67 for winners and losers between the baseline and <abbr>U.K.</abbr> scenarios, by selected characteristics</caption>
|
|
<colgroup span="1" style="width:15em"></colgroup>
|
|
<colgroup span="8" style="width:6em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" rowspan="2" id="c1">Characteristic</th>
|
|
<th class="spanner" colspan="4" id="c2">Winners</th>
|
|
<th class="spanner" colspan="4" id="c3">Losers</th>
|
|
</tr>
|
|
<tr>
|
|
<th id="c4" headers="c2">First boomers <span class="nobr">(1946–1950)</span></th>
|
|
<th id="c5" headers="c2">Second boomers <span class="nobr">(1951–1955)</span></th>
|
|
<th id="c6" headers="c2">Third boomers <span class="nobr">(1956–1960)</span></th>
|
|
<th id="c7" headers="c2">Last boomers <span class="nobr">(1961–1965)</span></th>
|
|
<th id="c8" headers="c3">First boomers <span class="nobr">(1946–1950)</span></th>
|
|
<th id="c9" headers="c3">Second boomers <span class="nobr">(1951–1955)</span></th>
|
|
<th id="c10" headers="c3">Third boomers <span class="nobr">(1956–1960)</span></th>
|
|
<th id="c11" headers="c3">Last boomers <span class="nobr">(1961–1965)</span></th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<th class="stub2" id="r1" headers="c1">All</th>
|
|
<td headers="r1 c2 c4">3.2</td>
|
|
<td headers="r1 c2 c5">3.3</td>
|
|
<td headers="r1 c2 c6">3.5</td>
|
|
<td headers="r1 c2 c7">5.6</td>
|
|
<td headers="r1 c3 c8">-4.0</td>
|
|
<td headers="r1 c3 c9">-6.1</td>
|
|
<td headers="r1 c3 c10">-7.1</td>
|
|
<td headers="r1 c3 c11">-7.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r2" headers="c1">Sex</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r3" headers="r2 c1">Women</th>
|
|
<td headers="r2 r3 c2 c4">3.3</td>
|
|
<td headers="r2 r3 c2 c5">4.1</td>
|
|
<td headers="r2 r3 c2 c6">3.5</td>
|
|
<td headers="r2 r3 c2 c7">6.3</td>
|
|
<td headers="r2 r3 c3 c8">-4.1</td>
|
|
<td headers="r2 r3 c3 c9">-6.2</td>
|
|
<td headers="r2 r3 c3 c10">-7.0</td>
|
|
<td headers="r2 r3 c3 c11">-7.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r4" headers="r2 c1">Men</th>
|
|
<td headers="r2 r4 c2 c4">3.1</td>
|
|
<td headers="r2 r4 c2 c5">2.7</td>
|
|
<td headers="r2 r4 c2 c6">3.5</td>
|
|
<td headers="r2 r4 c2 c7">5.0</td>
|
|
<td headers="r2 r4 c3 c8">-3.9</td>
|
|
<td headers="r2 r4 c3 c9">-6.1</td>
|
|
<td headers="r2 r4 c3 c10">-7.2</td>
|
|
<td headers="r2 r4 c3 c11">-6.9</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r5" headers="c1">Marital status</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r6" headers="r5 c1">Never married</th>
|
|
<td headers="r5 r6 c2 c4">4.0</td>
|
|
<td headers="r5 r6 c2 c5">2.8</td>
|
|
<td headers="r5 r6 c2 c6">5.1</td>
|
|
<td headers="r5 r6 c2 c7">8.2</td>
|
|
<td headers="r5 r6 c3 c8">-4.4</td>
|
|
<td headers="r5 r6 c3 c9">-7.7</td>
|
|
<td headers="r5 r6 c3 c10">-9.6</td>
|
|
<td headers="r5 r6 c3 c11">-8.9</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r7" headers="r5 c1">Married</th>
|
|
<td headers="r5 r7 c2 c4">3.3</td>
|
|
<td headers="r5 r7 c2 c5">2.8</td>
|
|
<td headers="r5 r7 c2 c6">2.9</td>
|
|
<td headers="r5 r7 c2 c7">4.8</td>
|
|
<td headers="r5 r7 c3 c8">-3.8</td>
|
|
<td headers="r5 r7 c3 c9">-5.7</td>
|
|
<td headers="r5 r7 c3 c10">-6.4</td>
|
|
<td headers="r5 r7 c3 c11">-6.7</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r8" headers="r5 c1">Widowed</th>
|
|
<td headers="r5 r8 c2 c4">1.8</td>
|
|
<td headers="r5 r8 c2 c5">8.6</td>
|
|
<td headers="r5 r8 c2 c6">3.2</td>
|
|
<td headers="r5 r8 c2 c7">8.3</td>
|
|
<td headers="r5 r8 c3 c8">-4.4</td>
|
|
<td headers="r5 r8 c3 c9">-7.3</td>
|
|
<td headers="r5 r8 c3 c10">-7.7</td>
|
|
<td headers="r5 r8 c3 c11">-9.5</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r9" headers="r5 c1">Divorced</th>
|
|
<td headers="r5 r9 c2 c4">2.9</td>
|
|
<td headers="r5 r9 c2 c5">3.9</td>
|
|
<td headers="r5 r9 c2 c6">6.2</td>
|
|
<td headers="r5 r9 c2 c7">7.2</td>
|
|
<td headers="r5 r9 c3 c8">-4.9</td>
|
|
<td headers="r5 r9 c3 c9">-7.0</td>
|
|
<td headers="r5 r9 c3 c10">-8.9</td>
|
|
<td headers="r5 r9 c3 c11">-7.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r10" headers="c1">Race/ethnicity</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r11" headers="r10 c1">Non-Hispanic white</th>
|
|
<td headers="r10 r11 c2 c4">3.1</td>
|
|
<td headers="r10 r11 c2 c5">3.2</td>
|
|
<td headers="r10 r11 c2 c6">3.1</td>
|
|
<td headers="r10 r11 c2 c7">5.7</td>
|
|
<td headers="r10 r11 c3 c8">-4.0</td>
|
|
<td headers="r10 r11 c3 c9">-6.1</td>
|
|
<td headers="r10 r11 c3 c10">-7.0</td>
|
|
<td headers="r10 r11 c3 c11">-7.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r12" headers="r10 c1">Non-Hispanic black</th>
|
|
<td headers="r10 r12 c2 c4">5.9</td>
|
|
<td headers="r10 r12 c2 c5">4.0</td>
|
|
<td headers="r10 r12 c2 c6">8.5</td>
|
|
<td headers="r10 r12 c2 c7">5.1</td>
|
|
<td headers="r10 r12 c3 c8">-4.2</td>
|
|
<td headers="r10 r12 c3 c9">-7.8</td>
|
|
<td headers="r10 r12 c3 c10">-9.4</td>
|
|
<td headers="r10 r12 c3 c11">-10.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r13" headers="r10 c1">Hispanic </th>
|
|
<td headers="r10 r13 c2 c4">3.4</td>
|
|
<td headers="r10 r13 c2 c5">3.1</td>
|
|
<td headers="r10 r13 c2 c6">3.1</td>
|
|
<td headers="r10 r13 c2 c7">6.3</td>
|
|
<td headers="r10 r13 c3 c8">-5.0</td>
|
|
<td headers="r10 r13 c3 c9">-3.9</td>
|
|
<td headers="r10 r13 c3 c10">-7.3</td>
|
|
<td headers="r10 r13 c3 c11">-6.4</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r14" headers="r10 c1">Other</th>
|
|
<td headers="r10 r14 c2 c4">1.5</td>
|
|
<td headers="r10 r14 c2 c5">4.1</td>
|
|
<td headers="r10 r14 c2 c6">4.0</td>
|
|
<td headers="r10 r14 c2 c7">2.9</td>
|
|
<td headers="r10 r14 c3 c8">-2.5</td>
|
|
<td headers="r10 r14 c3 c9">-6.1</td>
|
|
<td headers="r10 r14 c3 c10">-6.6</td>
|
|
<td headers="r10 r14 c3 c11">-4.4</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r15" headers="c1">Education</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r16" headers="r15 c1">High school dropout</th>
|
|
<td headers="r15 r16 c2 c4">3.0</td>
|
|
<td headers="r15 r16 c2 c5">4.6</td>
|
|
<td headers="r15 r16 c2 c6">3.6</td>
|
|
<td headers="r15 r16 c2 c7">4.4</td>
|
|
<td headers="r15 r16 c3 c8">-3.8</td>
|
|
<td headers="r15 r16 c3 c9">-5.2</td>
|
|
<td headers="r15 r16 c3 c10">-6.8</td>
|
|
<td headers="r15 r16 c3 c11">-8.8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r17" headers="r15 c1">High school graduate</th>
|
|
<td headers="r15 r17 c2 c4">2.7</td>
|
|
<td headers="r15 r17 c2 c5">3.5</td>
|
|
<td headers="r15 r17 c2 c6">3.1</td>
|
|
<td headers="r15 r17 c2 c7">5.2</td>
|
|
<td headers="r15 r17 c3 c8">-3.6</td>
|
|
<td headers="r15 r17 c3 c9">-5.8</td>
|
|
<td headers="r15 r17 c3 c10">-6.7</td>
|
|
<td headers="r15 r17 c3 c11">-7.5</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r18" headers="r15 c1">College graduate</th>
|
|
<td headers="r15 r18 c2 c4">3.7</td>
|
|
<td headers="r15 r18 c2 c5">3.0</td>
|
|
<td headers="r15 r18 c2 c6">4.0</td>
|
|
<td headers="r15 r18 c2 c7">6.1</td>
|
|
<td headers="r15 r18 c3 c8">-4.4</td>
|
|
<td headers="r15 r18 c3 c9">-6.6</td>
|
|
<td headers="r15 r18 c3 c10">-7.8</td>
|
|
<td headers="r15 r18 c3 c11">-6.8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r19" headers="c1">Labor force experience</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r20" headers="r19 c1">Less than 20 years</th>
|
|
<td headers="r19 r20 c2 c4">1.8</td>
|
|
<td headers="r19 r20 c2 c5">2.8</td>
|
|
<td headers="r19 r20 c2 c6">3.4</td>
|
|
<td headers="r19 r20 c2 c7">4.0</td>
|
|
<td headers="r19 r20 c3 c8">-5.1</td>
|
|
<td headers="r19 r20 c3 c9">-5.7</td>
|
|
<td headers="r19 r20 c3 c10">-8.8</td>
|
|
<td headers="r19 r20 c3 c11">-8.5</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r21" headers="r19 c1">20 to 29 years</th>
|
|
<td headers="r19 r21 c2 c4">4.4</td>
|
|
<td headers="r19 r21 c2 c5">3.4</td>
|
|
<td headers="r19 r21 c2 c6">2.1</td>
|
|
<td headers="r19 r21 c2 c7">4.3</td>
|
|
<td headers="r19 r21 c3 c8">-4.3</td>
|
|
<td headers="r19 r21 c3 c9">-5.2</td>
|
|
<td headers="r19 r21 c3 c10">-7.0</td>
|
|
<td headers="r19 r21 c3 c11">-6.9</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r22" headers="r19 c1">30 or more years</th>
|
|
<td headers="r19 r22 c2 c4">3.2</td>
|
|
<td headers="r19 r22 c2 c5">3.3</td>
|
|
<td headers="r19 r22 c2 c6">3.6</td>
|
|
<td headers="r19 r22 c2 c7">5.7</td>
|
|
<td headers="r19 r22 c3 c8">-4.0</td>
|
|
<td headers="r19 r22 c3 c9">-6.2</td>
|
|
<td headers="r19 r22 c3 c10">-7.1</td>
|
|
<td headers="r19 r22 c3 c11">-7.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r23" headers="c1">Shared lifetime earnings</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r24" headers="r23 c1">Bottom quintile</th>
|
|
<td headers="r23 r24 c2 c4">7.7</td>
|
|
<td headers="r23 r24 c2 c5">2.1</td>
|
|
<td headers="r23 r24 c2 c6">2.5</td>
|
|
<td headers="r23 r24 c2 c7">3.3</td>
|
|
<td headers="r23 r24 c3 c8">-5.5</td>
|
|
<td headers="r23 r24 c3 c9">-5.5</td>
|
|
<td headers="r23 r24 c3 c10">-7.6</td>
|
|
<td headers="r23 r24 c3 c11">-10.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r25" headers="r23 c1">2nd quintile </th>
|
|
<td headers="r23 r25 c2 c4">2.4</td>
|
|
<td headers="r23 r25 c2 c5">2.3</td>
|
|
<td headers="r23 r25 c2 c6">4.2</td>
|
|
<td headers="r23 r25 c2 c7">4.6</td>
|
|
<td headers="r23 r25 c3 c8">-4.1</td>
|
|
<td headers="r23 r25 c3 c9">-4.8</td>
|
|
<td headers="r23 r25 c3 c10">-5.8</td>
|
|
<td headers="r23 r25 c3 c11">-6.9</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r26" headers="r23 c1">3rd quintile </th>
|
|
<td headers="r23 r26 c2 c4">3.4</td>
|
|
<td headers="r23 r26 c2 c5">2.8</td>
|
|
<td headers="r23 r26 c2 c6">2.6</td>
|
|
<td headers="r23 r26 c2 c7">3.7</td>
|
|
<td headers="r23 r26 c3 c8">-3.9</td>
|
|
<td headers="r23 r26 c3 c9">-5.8</td>
|
|
<td headers="r23 r26 c3 c10">-6.9</td>
|
|
<td headers="r23 r26 c3 c11">-7.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r27" headers="r23 c1">4th quintile </th>
|
|
<td headers="r23 r27 c2 c4">2.9</td>
|
|
<td headers="r23 r27 c2 c5">3.8</td>
|
|
<td headers="r23 r27 c2 c6">4.5</td>
|
|
<td headers="r23 r27 c2 c7">5.5</td>
|
|
<td headers="r23 r27 c3 c8">-3.9</td>
|
|
<td headers="r23 r27 c3 c9">-6.3</td>
|
|
<td headers="r23 r27 c3 c10">-6.8</td>
|
|
<td headers="r23 r27 c3 c11">-6.9</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r28" headers="r23 c1">Top quintile</th>
|
|
<td headers="r23 r28 c2 c4">3.4</td>
|
|
<td headers="r23 r28 c2 c5">3.5</td>
|
|
<td headers="r23 r28 c2 c6">3.1</td>
|
|
<td headers="r23 r28 c2 c7">7.0</td>
|
|
<td headers="r23 r28 c3 c8">-4.0</td>
|
|
<td headers="r23 r28 c3 c9">-6.4</td>
|
|
<td headers="r23 r28 c3 c10">-7.7</td>
|
|
<td headers="r23 r28 c3 c11">-7.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r29" headers="c1">Income quintile</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r30" headers="r29 c1">Bottom quintile</th>
|
|
<td headers="r29 r30 c2 c4">6.4</td>
|
|
<td headers="r29 r30 c2 c5">5.9</td>
|
|
<td headers="r29 r30 c2 c6">5.8</td>
|
|
<td headers="r29 r30 c2 c7">6.8</td>
|
|
<td headers="r29 r30 c3 c8">-4.6</td>
|
|
<td headers="r29 r30 c3 c9">-5.3</td>
|
|
<td headers="r29 r30 c3 c10">-5.0</td>
|
|
<td headers="r29 r30 c3 c11">-6.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r31" headers="r29 c1">2nd quintile </th>
|
|
<td headers="r29 r31 c2 c4">8.7</td>
|
|
<td headers="r29 r31 c2 c5">2.5</td>
|
|
<td headers="r29 r31 c2 c6">5.0</td>
|
|
<td headers="r29 r31 c2 c7">6.4</td>
|
|
<td headers="r29 r31 c3 c8">-4.3</td>
|
|
<td headers="r29 r31 c3 c9">-5.2</td>
|
|
<td headers="r29 r31 c3 c10">-7.0</td>
|
|
<td headers="r29 r31 c3 c11">-7.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r32" headers="r29 c1">3rd quintile </th>
|
|
<td headers="r29 r32 c2 c4">3.5</td>
|
|
<td headers="r29 r32 c2 c5">4.8</td>
|
|
<td headers="r29 r32 c2 c6">4.0</td>
|
|
<td headers="r29 r32 c2 c7">6.6</td>
|
|
<td headers="r29 r32 c3 c8">-4.2</td>
|
|
<td headers="r29 r32 c3 c9">-6.1</td>
|
|
<td headers="r29 r32 c3 c10">-7.0</td>
|
|
<td headers="r29 r32 c3 c11">-8.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r33" headers="r29 c1">4th quintile </th>
|
|
<td headers="r29 r33 c2 c4">2.9</td>
|
|
<td headers="r29 r33 c2 c5">3.1</td>
|
|
<td headers="r29 r33 c2 c6">4.3</td>
|
|
<td headers="r29 r33 c2 c7">5.7</td>
|
|
<td headers="r29 r33 c3 c8">-3.8</td>
|
|
<td headers="r29 r33 c3 c9">-6.6</td>
|
|
<td headers="r29 r33 c3 c10">-7.5</td>
|
|
<td headers="r29 r33 c3 c11">-7.9</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r34" headers="r29 c1">Top quintile</th>
|
|
<td headers="r29 r34 c2 c4">2.8</td>
|
|
<td headers="r29 r34 c2 c5">3.0</td>
|
|
<td headers="r29 r34 c2 c6">2.4</td>
|
|
<td headers="r29 r34 c2 c7">4.9</td>
|
|
<td headers="r29 r34 c3 c8">-4.0</td>
|
|
<td headers="r29 r34 c3 c9">-6.0</td>
|
|
<td headers="r29 r34 c3 c10">-7.0</td>
|
|
<td headers="r29 r34 c3 c11">-6.8</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="9">SOURCE: Authors' computations of <abbr>MINT</abbr>5 (see text for details).</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="9">NOTE: Projections exclude individuals with family wealth in the top 5 percent of the distribution. Shared lifetime earnings is the average of <span class="nobr">wage-indexed</span> shared earnings between ages 22 and 62, where shared earnings are computed by assigning each individual half the total earnings of the couple in the years when the individual is married and his or her own earnings in years when nonmarried. Winners and losers are defined as having at least a $10 change in income between the baseline and <abbr>U.K.</abbr> scenarios.</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<div class="table" id="tableb2">
|
|
<table>
|
|
<caption><span class="tableNumber">Table B-2. </span>Percent of individuals who win, mean family income per person (in thousands of 2007 dollars), and percent change in family income at age 67 for winners, by income source and level of income change</caption>
|
|
<colgroup span="1" style="width:15em"></colgroup>
|
|
<colgroup span="8" style="width:6em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" rowspan="2" id="c1"></th>
|
|
<th class="spanner" colspan="4" id="c2">Baseline</th>
|
|
<th class="spanner" colspan="4" id="c3">Difference between baseline and <abbr>U.K.</abbr> scenarios</th>
|
|
</tr>
|
|
<tr>
|
|
<th id="c4" headers="c2">First boomers <span class="nobr">(1946–1950)</span></th>
|
|
<th id="c5" headers="c2">Second boomers <span class="nobr">(1951–1955)</span></th>
|
|
<th id="c6" headers="c2">Third boomers <span class="nobr">(1956–1960)</span></th>
|
|
<th id="c7" headers="c2">Last boomers <span class="nobr">(1961–1965)</span></th>
|
|
<th id="c8" headers="c3">First boomers <span class="nobr">(1946–1950)</span></th>
|
|
<th id="c9" headers="c3">Second boomers <span class="nobr">(1951–1955)</span></th>
|
|
<th id="c10" headers="c3">Third boomers <span class="nobr">(1956–1960)</span></th>
|
|
<th id="c11" headers="c3">Last boomers <span class="nobr">(1961–1965)</span></th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<td></td>
|
|
<th class="panel" colspan="8" id="r1">Less than 2% change in family income</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r2" headers="r1 c1">Winners (%)</th>
|
|
<td headers="r1 r2 c2 c4">5.0</td>
|
|
<td headers="r1 r2 c2 c5">5.0</td>
|
|
<td headers="r1 r2 c2 c6">6.0</td>
|
|
<td headers="r1 r2 c2 c7">5.0</td>
|
|
<td headers="r1 r2 c3 c8">. . .</td>
|
|
<td headers="r1 r2 c3 c9">. . .</td>
|
|
<td headers="r1 r2 c3 c10">. . .</td>
|
|
<td headers="r1 r2 c3 c11">. . .</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r3" headers="r1 c1">Income source ($)</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r4" headers="r1 r3 c1">Income from assets</th>
|
|
<td headers="r1 r3 r4 c2 c4">9.2</td>
|
|
<td headers="r1 r3 r4 c2 c5">8.9</td>
|
|
<td headers="r1 r3 r4 c2 c6">9.1</td>
|
|
<td headers="r1 r3 r4 c2 c7">8.2</td>
|
|
<td headers="r1 r3 r4 c3 c8">0.0</td>
|
|
<td headers="r1 r3 r4 c3 c9">0.0</td>
|
|
<td headers="r1 r3 r4 c3 c10">-0.1</td>
|
|
<td headers="r1 r3 r4 c3 c11">-0.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r5" headers="r1 r3 c1">Earnings</th>
|
|
<td headers="r1 r3 r5 c2 c4">22.5</td>
|
|
<td headers="r1 r3 r5 c2 c5">16.1</td>
|
|
<td headers="r1 r3 r5 c2 c6">14.6</td>
|
|
<td headers="r1 r3 r5 c2 c7">16.5</td>
|
|
<td headers="r1 r3 r5 c3 c8">0.0</td>
|
|
<td headers="r1 r3 r5 c3 c9">0.0</td>
|
|
<td headers="r1 r3 r5 c3 c10">0.0</td>
|
|
<td headers="r1 r3 r5 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r6" headers="r1 r3 c1"><abbr class="spell">SSI</abbr> payments</th>
|
|
<td headers="r1 r3 r6 c2 c4">0.0</td>
|
|
<td headers="r1 r3 r6 c2 c5">0.0</td>
|
|
<td headers="r1 r3 r6 c2 c6">0.0</td>
|
|
<td headers="r1 r3 r6 c2 c7">0.0</td>
|
|
<td headers="r1 r3 r6 c3 c8">0.0</td>
|
|
<td headers="r1 r3 r6 c3 c9">0.0</td>
|
|
<td headers="r1 r3 r6 c3 c10">0.0</td>
|
|
<td headers="r1 r3 r6 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r7" headers="r1 r3 c1">Imputed rental income</th>
|
|
<td headers="r1 r3 r7 c2 c4">3.9</td>
|
|
<td headers="r1 r3 r7 c2 c5">3.6</td>
|
|
<td headers="r1 r3 r7 c2 c6">3.5</td>
|
|
<td headers="r1 r3 r7 c2 c7">3.2</td>
|
|
<td headers="r1 r3 r7 c3 c8">0.0</td>
|
|
<td headers="r1 r3 r7 c3 c9">0.0</td>
|
|
<td headers="r1 r3 r7 c3 c10">0.0</td>
|
|
<td headers="r1 r3 r7 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r8" headers="r1 r3 c1">Social Security benefits</th>
|
|
<td headers="r1 r3 r8 c2 c4">14.3</td>
|
|
<td headers="r1 r3 r8 c2 c5">14.1</td>
|
|
<td headers="r1 r3 r8 c2 c6">13.7</td>
|
|
<td headers="r1 r3 r8 c2 c7">13.4</td>
|
|
<td headers="r1 r3 r8 c3 c8">0.0</td>
|
|
<td headers="r1 r3 r8 c3 c9">0.0</td>
|
|
<td headers="r1 r3 r8 c3 c10">0.0</td>
|
|
<td headers="r1 r3 r8 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r9" headers="r1 r3 c1"><abbr class="spell">DB</abbr> pension benefits</th>
|
|
<td headers="r1 r3 r9 c2 c4">7.2</td>
|
|
<td headers="r1 r3 r9 c2 c5">4.3</td>
|
|
<td headers="r1 r3 r9 c2 c6">3.7</td>
|
|
<td headers="r1 r3 r9 c2 c7">2.2</td>
|
|
<td headers="r1 r3 r9 c3 c8">0.0</td>
|
|
<td headers="r1 r3 r9 c3 c9">0.0</td>
|
|
<td headers="r1 r3 r9 c3 c10">-0.2</td>
|
|
<td headers="r1 r3 r9 c3 c11">-0.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r10" headers="r1 r3 c1">Retirement accounts</th>
|
|
<td headers="r1 r3 r10 c2 c4">10.1</td>
|
|
<td headers="r1 r3 r10 c2 c5">9.7</td>
|
|
<td headers="r1 r3 r10 c2 c6">10.7</td>
|
|
<td headers="r1 r3 r10 c2 c7">10.5</td>
|
|
<td headers="r1 r3 r10 c3 c8">0.4</td>
|
|
<td headers="r1 r3 r10 c3 c9">0.4</td>
|
|
<td headers="r1 r3 r10 c3 c10">0.6</td>
|
|
<td headers="r1 r3 r10 c3 c11">0.8</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub2" id="r11" headers="r1 r3 r10 c1">Total income</th>
|
|
<td headers="r1 r3 r10 r11 c2 c4">67.2</td>
|
|
<td headers="r1 r3 r10 r11 c2 c5">56.7</td>
|
|
<td headers="r1 r3 r10 r11 c2 c6">55.3</td>
|
|
<td headers="r1 r3 r10 r11 c2 c7">54.0</td>
|
|
<td headers="r1 r3 r10 r11 c3 c8">0.4</td>
|
|
<td headers="r1 r3 r10 r11 c3 c9">0.4</td>
|
|
<td headers="r1 r3 r10 r11 c3 c10">0.4</td>
|
|
<td headers="r1 r3 r10 r11 c3 c11">0.4</td>
|
|
</tr>
|
|
<tr>
|
|
<td></td>
|
|
<th class="panel" colspan="8" id="r12">2% to less than 5% change in family income</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r13" headers="r12 c1">Winners (%)</th>
|
|
<td headers="r12 r13 c2 c4">1.0</td>
|
|
<td headers="r12 r13 c2 c5">1.0</td>
|
|
<td headers="r12 r13 c2 c6">2.0</td>
|
|
<td headers="r12 r13 c2 c7">3.0</td>
|
|
<td headers="r12 r13 c3 c8">. . .</td>
|
|
<td headers="r12 r13 c3 c9">. . .</td>
|
|
<td headers="r12 r13 c3 c10">. . .</td>
|
|
<td headers="r12 r13 c3 c11">. . .</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r14" headers="r12 c1">Income source ($)</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r15" headers="r12 r14 c1">Income from assets</th>
|
|
<td headers="r12 r14 r15 c2 c4">8.7</td>
|
|
<td headers="r12 r14 r15 c2 c5">5.3</td>
|
|
<td headers="r12 r14 r15 c2 c6">6.1</td>
|
|
<td headers="r12 r14 r15 c2 c7">7.0</td>
|
|
<td headers="r12 r14 r15 c3 c8">0.0</td>
|
|
<td headers="r12 r14 r15 c3 c9">-0.1</td>
|
|
<td headers="r12 r14 r15 c3 c10">-0.1</td>
|
|
<td headers="r12 r14 r15 c3 c11">-0.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r16" headers="r12 r14 c1">Earnings</th>
|
|
<td headers="r12 r14 r16 c2 c4">11.7</td>
|
|
<td headers="r12 r14 r16 c2 c5">9.9</td>
|
|
<td headers="r12 r14 r16 c2 c6">8.6</td>
|
|
<td headers="r12 r14 r16 c2 c7">12.6</td>
|
|
<td headers="r12 r14 r16 c3 c8">0.0</td>
|
|
<td headers="r12 r14 r16 c3 c9">0.1</td>
|
|
<td headers="r12 r14 r16 c3 c10">0.0</td>
|
|
<td headers="r12 r14 r16 c3 c11">0.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r17" headers="r12 r14 c1"><abbr class="spell">SSI</abbr> payments</th>
|
|
<td headers="r12 r14 r17 c2 c4">0.0</td>
|
|
<td headers="r12 r14 r17 c2 c5">0.0</td>
|
|
<td headers="r12 r14 r17 c2 c6">0.0</td>
|
|
<td headers="r12 r14 r17 c2 c7">0.0</td>
|
|
<td headers="r12 r14 r17 c3 c8">0.0</td>
|
|
<td headers="r12 r14 r17 c3 c9">0.0</td>
|
|
<td headers="r12 r14 r17 c3 c10">0.0</td>
|
|
<td headers="r12 r14 r17 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r18" headers="r12 r14 c1">Imputed rental income</th>
|
|
<td headers="r12 r14 r18 c2 c4">3.2</td>
|
|
<td headers="r12 r14 r18 c2 c5">3.5</td>
|
|
<td headers="r12 r14 r18 c2 c6">2.7</td>
|
|
<td headers="r12 r14 r18 c2 c7">2.6</td>
|
|
<td headers="r12 r14 r18 c3 c8">0.0</td>
|
|
<td headers="r12 r14 r18 c3 c9">0.0</td>
|
|
<td headers="r12 r14 r18 c3 c10">0.0</td>
|
|
<td headers="r12 r14 r18 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r19" headers="r12 r14 c1">Social Security benefits</th>
|
|
<td headers="r12 r14 r19 c2 c4">14.5</td>
|
|
<td headers="r12 r14 r19 c2 c5">14.7</td>
|
|
<td headers="r12 r14 r19 c2 c6">14.2</td>
|
|
<td headers="r12 r14 r19 c2 c7">13.6</td>
|
|
<td headers="r12 r14 r19 c3 c8">0.0</td>
|
|
<td headers="r12 r14 r19 c3 c9">0.0</td>
|
|
<td headers="r12 r14 r19 c3 c10">0.0</td>
|
|
<td headers="r12 r14 r19 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r20" headers="r12 r14 c1"><abbr class="spell">DB</abbr> pension benefits</th>
|
|
<td headers="r12 r14 r20 c2 c4">11.0</td>
|
|
<td headers="r12 r14 r20 c2 c5">5.4</td>
|
|
<td headers="r12 r14 r20 c2 c6">4.8</td>
|
|
<td headers="r12 r14 r20 c2 c7">2.8</td>
|
|
<td headers="r12 r14 r20 c3 c8">1.1</td>
|
|
<td headers="r12 r14 r20 c3 c9">0.2</td>
|
|
<td headers="r12 r14 r20 c3 c10">-0.1</td>
|
|
<td headers="r12 r14 r20 c3 c11">-0.4</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r21" headers="r12 r14 c1">Retirement accounts</th>
|
|
<td headers="r12 r14 r21 c2 c4">6.9</td>
|
|
<td headers="r12 r14 r21 c2 c5">7.8</td>
|
|
<td headers="r12 r14 r21 c2 c6">9.0</td>
|
|
<td headers="r12 r14 r21 c2 c7">10.0</td>
|
|
<td headers="r12 r14 r21 c3 c8">0.7</td>
|
|
<td headers="r12 r14 r21 c3 c9">1.2</td>
|
|
<td headers="r12 r14 r21 c3 c10">1.6</td>
|
|
<td headers="r12 r14 r21 c3 c11">2.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub2" id="r22" headers="r12 r14 r21 c1">Total income</th>
|
|
<td headers="r12 r14 r21 r22 c2 c4">56.0</td>
|
|
<td headers="r12 r14 r21 r22 c2 c5">46.6</td>
|
|
<td headers="r12 r14 r21 r22 c2 c6">45.3</td>
|
|
<td headers="r12 r14 r21 r22 c2 c7">48.6</td>
|
|
<td headers="r12 r14 r21 r22 c3 c8">1.8</td>
|
|
<td headers="r12 r14 r21 r22 c3 c9">1.5</td>
|
|
<td headers="r12 r14 r21 r22 c3 c10">1.4</td>
|
|
<td headers="r12 r14 r21 r22 c3 c11">1.6</td>
|
|
</tr>
|
|
<tr>
|
|
<td></td>
|
|
<th class="panel" colspan="8" id="r23">Greater than or equal to 5% change in family income</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r24" headers="r23 c1">Winners (%)</th>
|
|
<td headers="r23 r24 c2 c4">1.0</td>
|
|
<td headers="r23 r24 c2 c5">1.0</td>
|
|
<td headers="r23 r24 c2 c6">2.0</td>
|
|
<td headers="r23 r24 c2 c7">3.0</td>
|
|
<td headers="r23 r24 c3 c8">. . .</td>
|
|
<td headers="r23 r24 c3 c9">. . .</td>
|
|
<td headers="r23 r24 c3 c10">. . .</td>
|
|
<td headers="r23 r24 c3 c11">. . .</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r25" headers="r23 c1">Income source ($)</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r26" headers="r23 r25 c1">Income from assets</th>
|
|
<td headers="r23 r25 r26 c2 c4">5.3</td>
|
|
<td headers="r23 r25 r26 c2 c5">5.8</td>
|
|
<td headers="r23 r25 r26 c2 c6">6.3</td>
|
|
<td headers="r23 r25 r26 c2 c7">6.0</td>
|
|
<td headers="r23 r25 r26 c3 c8">0.0</td>
|
|
<td headers="r23 r25 r26 c3 c9">0.1</td>
|
|
<td headers="r23 r25 r26 c3 c10">0.0</td>
|
|
<td headers="r23 r25 r26 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r27" headers="r23 r25 c1">Earnings</th>
|
|
<td headers="r23 r25 r27 c2 c4">11.5</td>
|
|
<td headers="r23 r25 r27 c2 c5">9.4</td>
|
|
<td headers="r23 r25 r27 c2 c6">6.7</td>
|
|
<td headers="r23 r25 r27 c2 c7">7.3</td>
|
|
<td headers="r23 r25 r27 c3 c8">3.6</td>
|
|
<td headers="r23 r25 r27 c3 c9">3.7</td>
|
|
<td headers="r23 r25 r27 c3 c10">3.4</td>
|
|
<td headers="r23 r25 r27 c3 c11">5.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r28" headers="r23 r25 c1"><abbr class="spell">SSI</abbr> payments</th>
|
|
<td headers="r23 r25 r28 c2 c4">0.0</td>
|
|
<td headers="r23 r25 r28 c2 c5">0.0</td>
|
|
<td headers="r23 r25 r28 c2 c6">0.0</td>
|
|
<td headers="r23 r25 r28 c2 c7">0.0</td>
|
|
<td headers="r23 r25 r28 c3 c8">0.0</td>
|
|
<td headers="r23 r25 r28 c3 c9">0.0</td>
|
|
<td headers="r23 r25 r28 c3 c10">0.0</td>
|
|
<td headers="r23 r25 r28 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r29" headers="r23 r25 c1">Imputed rental income</th>
|
|
<td headers="r23 r25 r29 c2 c4">3.5</td>
|
|
<td headers="r23 r25 r29 c2 c5">3.0</td>
|
|
<td headers="r23 r25 r29 c2 c6">2.8</td>
|
|
<td headers="r23 r25 r29 c2 c7">2.7</td>
|
|
<td headers="r23 r25 r29 c3 c8">0.0</td>
|
|
<td headers="r23 r25 r29 c3 c9">0.0</td>
|
|
<td headers="r23 r25 r29 c3 c10">0.0</td>
|
|
<td headers="r23 r25 r29 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r30" headers="r23 r25 c1">Social Security benefits</th>
|
|
<td headers="r23 r25 r30 c2 c4">14.8</td>
|
|
<td headers="r23 r25 r30 c2 c5">15.3</td>
|
|
<td headers="r23 r25 r30 c2 c6">14.4</td>
|
|
<td headers="r23 r25 r30 c2 c7">14.2</td>
|
|
<td headers="r23 r25 r30 c3 c8">0.2</td>
|
|
<td headers="r23 r25 r30 c3 c9">0.3</td>
|
|
<td headers="r23 r25 r30 c3 c10">0.4</td>
|
|
<td headers="r23 r25 r30 c3 c11">0.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r31" headers="r23 r25 c1"><abbr class="spell">DB</abbr> pension benefits</th>
|
|
<td headers="r23 r25 r31 c2 c4">11.7</td>
|
|
<td headers="r23 r25 r31 c2 c5">7.1</td>
|
|
<td headers="r23 r25 r31 c2 c6">4.7</td>
|
|
<td headers="r23 r25 r31 c2 c7">4.3</td>
|
|
<td headers="r23 r25 r31 c3 c8">6.4</td>
|
|
<td headers="r23 r25 r31 c3 c9">3.5</td>
|
|
<td headers="r23 r25 r31 c3 c10">0.0</td>
|
|
<td headers="r23 r25 r31 c3 c11">-1.4</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r32" headers="r23 r25 c1">Retirement accounts</th>
|
|
<td headers="r23 r25 r32 c2 c4">8.4</td>
|
|
<td headers="r23 r25 r32 c2 c5">7.8</td>
|
|
<td headers="r23 r25 r32 c2 c6">7.3</td>
|
|
<td headers="r23 r25 r32 c2 c7">6.9</td>
|
|
<td headers="r23 r25 r32 c3 c8">0.6</td>
|
|
<td headers="r23 r25 r32 c3 c9">2.1</td>
|
|
<td headers="r23 r25 r32 c3 c10">3.0</td>
|
|
<td headers="r23 r25 r32 c3 c11">4.6</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub2" id="r33" headers="r23 r25 r32 c1">Total income</th>
|
|
<td headers="r23 r25 r32 r33 c2 c4">55.2</td>
|
|
<td headers="r23 r25 r32 r33 c2 c5">48.4</td>
|
|
<td headers="r23 r25 r32 r33 c2 c6">42.1</td>
|
|
<td headers="r23 r25 r32 r33 c2 c7">41.5</td>
|
|
<td headers="r23 r25 r32 r33 c3 c8">10.7</td>
|
|
<td headers="r23 r25 r32 r33 c3 c9">9.6</td>
|
|
<td headers="r23 r25 r32 r33 c3 c10">6.8</td>
|
|
<td headers="r23 r25 r32 r33 c3 c11">8.6</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="9">SOURCE: Authors' computations of <abbr>MINT</abbr>5 (see text for details).</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="note" colspan="9">NOTES: Projections exclude individuals with family wealth in the top 5 percent of the distribution. Winners are defined as having at least a $10 increase in income between the baseline and <abbr>U.K.</abbr> scenarios.</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="9">. . . = not applicable.</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<div class="table" id="tableb3">
|
|
<table>
|
|
<caption><span class="tableNumber">Table B-3. </span>Percent of individuals who lose, mean family income per person (in thousands of 2007 dollars), and percent change in family income at age 67 for losers, by income source and level of income change</caption>
|
|
<colgroup span="1" style="width:15em"></colgroup>
|
|
<colgroup span="8" style="width:6em"></colgroup>
|
|
<thead>
|
|
<tr>
|
|
<th class="stubHeading" rowspan="2" id="c1"></th>
|
|
<th class="spanner" colspan="4" id="c2">Baseline</th>
|
|
<th class="spanner" colspan="4" id="c3">Difference between baseline and <abbr>U.K.</abbr> scenarios</th>
|
|
</tr>
|
|
<tr>
|
|
<th id="c4" headers="c2">First boomers <span class="nobr">(1946–1950)</span></th>
|
|
<th id="c5" headers="c2">Second boomers <span class="nobr">(1951–1955)</span></th>
|
|
<th id="c6" headers="c2">Third boomers <span class="nobr">(1956–1960)</span></th>
|
|
<th id="c7" headers="c2">Last boomers <span class="nobr">(1961–1965)</span></th>
|
|
<th id="c8" headers="c3">First boomers <span class="nobr">(1946–1950)</span></th>
|
|
<th id="c9" headers="c3">Second boomers <span class="nobr">(1951–1955)</span></th>
|
|
<th id="c10" headers="c3">Third boomers <span class="nobr">(1956–1960)</span></th>
|
|
<th id="c11" headers="c3">Last boomers <span class="nobr">(1961–1965)</span></th>
|
|
</tr>
|
|
</thead>
|
|
<tbody>
|
|
<tr>
|
|
<td></td>
|
|
<th class="panel" colspan="8" id="r1">Less than 2% change in family income</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r2" headers="r1 c1">Losers (%)</th>
|
|
<td headers="r1 r2 c2 c4">5.0</td>
|
|
<td headers="r1 r2 c2 c5">7.0</td>
|
|
<td headers="r1 r2 c2 c6">8.0</td>
|
|
<td headers="r1 r2 c2 c7">11.0</td>
|
|
<td headers="r1 r2 c3 c8">. . .</td>
|
|
<td headers="r1 r2 c3 c9">. . .</td>
|
|
<td headers="r1 r2 c3 c10">. . .</td>
|
|
<td headers="r1 r2 c3 c11">. . .</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r3" headers="r1 c1">Income source ($)</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r4" headers="r1 r3 c1">Income from assets</th>
|
|
<td headers="r1 r3 r4 c2 c4">9.4</td>
|
|
<td headers="r1 r3 r4 c2 c5">9.8</td>
|
|
<td headers="r1 r3 r4 c2 c6">11.4</td>
|
|
<td headers="r1 r3 r4 c2 c7">13.4</td>
|
|
<td headers="r1 r3 r4 c3 c8">0.0</td>
|
|
<td headers="r1 r3 r4 c3 c9">0.0</td>
|
|
<td headers="r1 r3 r4 c3 c10">0.0</td>
|
|
<td headers="r1 r3 r4 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r5" headers="r1 r3 c1">Earnings</th>
|
|
<td headers="r1 r3 r5 c2 c4">17.9</td>
|
|
<td headers="r1 r3 r5 c2 c5">14.8</td>
|
|
<td headers="r1 r3 r5 c2 c6">15.1</td>
|
|
<td headers="r1 r3 r5 c2 c7">17.1</td>
|
|
<td headers="r1 r3 r5 c3 c8">0.0</td>
|
|
<td headers="r1 r3 r5 c3 c9">0.0</td>
|
|
<td headers="r1 r3 r5 c3 c10">0.0</td>
|
|
<td headers="r1 r3 r5 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r6" headers="r1 r3 c1"><abbr class="spell">SSI</abbr> payments</th>
|
|
<td headers="r1 r3 r6 c2 c4">0.0</td>
|
|
<td headers="r1 r3 r6 c2 c5">0.0</td>
|
|
<td headers="r1 r3 r6 c2 c6">0.0</td>
|
|
<td headers="r1 r3 r6 c2 c7">0.0</td>
|
|
<td headers="r1 r3 r6 c3 c8">0.0</td>
|
|
<td headers="r1 r3 r6 c3 c9">0.0</td>
|
|
<td headers="r1 r3 r6 c3 c10">0.0</td>
|
|
<td headers="r1 r3 r6 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r7" headers="r1 r3 c1">Imputed rental income</th>
|
|
<td headers="r1 r3 r7 c2 c4">4.0</td>
|
|
<td headers="r1 r3 r7 c2 c5">3.7</td>
|
|
<td headers="r1 r3 r7 c2 c6">4.0</td>
|
|
<td headers="r1 r3 r7 c2 c7">4.4</td>
|
|
<td headers="r1 r3 r7 c3 c8">0.0</td>
|
|
<td headers="r1 r3 r7 c3 c9">0.0</td>
|
|
<td headers="r1 r3 r7 c3 c10">0.0</td>
|
|
<td headers="r1 r3 r7 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r8" headers="r1 r3 c1">Social Security benefits</th>
|
|
<td headers="r1 r3 r8 c2 c4">14.9</td>
|
|
<td headers="r1 r3 r8 c2 c5">14.9</td>
|
|
<td headers="r1 r3 r8 c2 c6">14.7</td>
|
|
<td headers="r1 r3 r8 c2 c7">15.6</td>
|
|
<td headers="r1 r3 r8 c3 c8">0.0</td>
|
|
<td headers="r1 r3 r8 c3 c9">0.0</td>
|
|
<td headers="r1 r3 r8 c3 c10">0.0</td>
|
|
<td headers="r1 r3 r8 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r9" headers="r1 r3 c1"><abbr class="spell">DB</abbr> pension benefits</th>
|
|
<td headers="r1 r3 r9 c2 c4">6.0</td>
|
|
<td headers="r1 r3 r9 c2 c5">4.7</td>
|
|
<td headers="r1 r3 r9 c2 c6">3.0</td>
|
|
<td headers="r1 r3 r9 c2 c7">3.1</td>
|
|
<td headers="r1 r3 r9 c3 c8">-0.4</td>
|
|
<td headers="r1 r3 r9 c3 c9">-0.5</td>
|
|
<td headers="r1 r3 r9 c3 c10">-0.5</td>
|
|
<td headers="r1 r3 r9 c3 c11">-0.5</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r10" headers="r1 r3 c1">Retirement accounts</th>
|
|
<td headers="r1 r3 r10 c2 c4">13.8</td>
|
|
<td headers="r1 r3 r10 c2 c5">12.9</td>
|
|
<td headers="r1 r3 r10 c2 c6">12.1</td>
|
|
<td headers="r1 r3 r10 c2 c7">12.9</td>
|
|
<td headers="r1 r3 r10 c3 c8">-0.1</td>
|
|
<td headers="r1 r3 r10 c3 c9">0.0</td>
|
|
<td headers="r1 r3 r10 c3 c10">0.1</td>
|
|
<td headers="r1 r3 r10 c3 c11">0.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub2" id="r11" headers="r1 r3 r10 c1">Total income</th>
|
|
<td headers="r1 r3 r10 r11 c2 c4">66.0</td>
|
|
<td headers="r1 r3 r10 r11 c2 c5">60.8</td>
|
|
<td headers="r1 r3 r10 r11 c2 c6">60.3</td>
|
|
<td headers="r1 r3 r10 r11 c2 c7">66.5</td>
|
|
<td headers="r1 r3 r10 r11 c3 c8">-0.6</td>
|
|
<td headers="r1 r3 r10 r11 c3 c9">-0.5</td>
|
|
<td headers="r1 r3 r10 r11 c3 c10">-0.4</td>
|
|
<td headers="r1 r3 r10 r11 c3 c11">-0.3</td>
|
|
</tr>
|
|
<tr>
|
|
<td></td>
|
|
<th class="panel" colspan="8" id="r12">2% to less than 5% change in family income</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r13" headers="r12 c1">Losers (%)</th>
|
|
<td headers="r12 r13 c2 c4">4.0</td>
|
|
<td headers="r12 r13 c2 c5">4.0</td>
|
|
<td headers="r12 r13 c2 c6">4.0</td>
|
|
<td headers="r12 r13 c2 c7">4.0</td>
|
|
<td headers="r12 r13 c3 c8">. . .</td>
|
|
<td headers="r12 r13 c3 c9">. . .</td>
|
|
<td headers="r12 r13 c3 c10">. . .</td>
|
|
<td headers="r12 r13 c3 c11">. . .</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r14" headers="r12 c1">Income source ($)</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r15" headers="r12 r14 c1">Income from assets</th>
|
|
<td headers="r12 r14 r15 c2 c4">7.0</td>
|
|
<td headers="r12 r14 r15 c2 c5">8.0</td>
|
|
<td headers="r12 r14 r15 c2 c6">7.8</td>
|
|
<td headers="r12 r14 r15 c2 c7">7.9</td>
|
|
<td headers="r12 r14 r15 c3 c8">0.0</td>
|
|
<td headers="r12 r14 r15 c3 c9">0.0</td>
|
|
<td headers="r12 r14 r15 c3 c10">0.0</td>
|
|
<td headers="r12 r14 r15 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r16" headers="r12 r14 c1">Earnings</th>
|
|
<td headers="r12 r14 r16 c2 c4">12.2</td>
|
|
<td headers="r12 r14 r16 c2 c5">9.6</td>
|
|
<td headers="r12 r14 r16 c2 c6">8.7</td>
|
|
<td headers="r12 r14 r16 c2 c7">10.0</td>
|
|
<td headers="r12 r14 r16 c3 c8">0.0</td>
|
|
<td headers="r12 r14 r16 c3 c9">0.0</td>
|
|
<td headers="r12 r14 r16 c3 c10">0.0</td>
|
|
<td headers="r12 r14 r16 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r17" headers="r12 r14 c1"><abbr class="spell">SSI</abbr> payments</th>
|
|
<td headers="r12 r14 r17 c2 c4">0.0</td>
|
|
<td headers="r12 r14 r17 c2 c5">0.0</td>
|
|
<td headers="r12 r14 r17 c2 c6">0.0</td>
|
|
<td headers="r12 r14 r17 c2 c7">0.0</td>
|
|
<td headers="r12 r14 r17 c3 c8">0.0</td>
|
|
<td headers="r12 r14 r17 c3 c9">0.0</td>
|
|
<td headers="r12 r14 r17 c3 c10">0.0</td>
|
|
<td headers="r12 r14 r17 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r18" headers="r12 r14 c1">Imputed rental income</th>
|
|
<td headers="r12 r14 r18 c2 c4">3.8</td>
|
|
<td headers="r12 r14 r18 c2 c5">3.5</td>
|
|
<td headers="r12 r14 r18 c2 c6">3.3</td>
|
|
<td headers="r12 r14 r18 c2 c7">2.7</td>
|
|
<td headers="r12 r14 r18 c3 c8">0.0</td>
|
|
<td headers="r12 r14 r18 c3 c9">0.0</td>
|
|
<td headers="r12 r14 r18 c3 c10">0.0</td>
|
|
<td headers="r12 r14 r18 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r19" headers="r12 r14 c1">Social Security benefits</th>
|
|
<td headers="r12 r14 r19 c2 c4">15.9</td>
|
|
<td headers="r12 r14 r19 c2 c5">15.9</td>
|
|
<td headers="r12 r14 r19 c2 c6">15.3</td>
|
|
<td headers="r12 r14 r19 c2 c7">14.3</td>
|
|
<td headers="r12 r14 r19 c3 c8">0.0</td>
|
|
<td headers="r12 r14 r19 c3 c9">0.0</td>
|
|
<td headers="r12 r14 r19 c3 c10">0.0</td>
|
|
<td headers="r12 r14 r19 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r20" headers="r12 r14 c1"><abbr class="spell">DB</abbr> pension benefits</th>
|
|
<td headers="r12 r14 r20 c2 c4">12.5</td>
|
|
<td headers="r12 r14 r20 c2 c5">8.0</td>
|
|
<td headers="r12 r14 r20 c2 c6">5.4</td>
|
|
<td headers="r12 r14 r20 c2 c7">4.2</td>
|
|
<td headers="r12 r14 r20 c3 c8">-2.1</td>
|
|
<td headers="r12 r14 r20 c3 c9">-1.8</td>
|
|
<td headers="r12 r14 r20 c3 c10">-1.9</td>
|
|
<td headers="r12 r14 r20 c3 c11">-1.9</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r21" headers="r12 r14 c1">Retirement accounts</th>
|
|
<td headers="r12 r14 r21 c2 c4">10.7</td>
|
|
<td headers="r12 r14 r21 c2 c5">12.3</td>
|
|
<td headers="r12 r14 r21 c2 c6">12.9</td>
|
|
<td headers="r12 r14 r21 c2 c7">11.2</td>
|
|
<td headers="r12 r14 r21 c3 c8">0.1</td>
|
|
<td headers="r12 r14 r21 c3 c9">-0.1</td>
|
|
<td headers="r12 r14 r21 c3 c10">0.1</td>
|
|
<td headers="r12 r14 r21 c3 c11">0.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub2" id="r22" headers="r12 r14 r21 c1">Total income</th>
|
|
<td headers="r12 r14 r21 r22 c2 c4">62.1</td>
|
|
<td headers="r12 r14 r21 r22 c2 c5">57.3</td>
|
|
<td headers="r12 r14 r21 r22 c2 c6">53.4</td>
|
|
<td headers="r12 r14 r21 r22 c2 c7">50.2</td>
|
|
<td headers="r12 r14 r21 r22 c3 c8">-2.0</td>
|
|
<td headers="r12 r14 r21 r22 c3 c9">-1.9</td>
|
|
<td headers="r12 r14 r21 r22 c3 c10">-1.8</td>
|
|
<td headers="r12 r14 r21 r22 c3 c11">-1.7</td>
|
|
</tr>
|
|
<tr>
|
|
<td></td>
|
|
<th class="panel" colspan="8" id="r23">Greater than or equal to 5% change in family income</th>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r24" headers="r23 c1">Losers (%)</th>
|
|
<td headers="r23 r24 c2 c4">3.0</td>
|
|
<td headers="r23 r24 c2 c5">7.0</td>
|
|
<td headers="r23 r24 c2 c6">9.0</td>
|
|
<td headers="r23 r24 c2 c7">10.0</td>
|
|
<td headers="r23 r24 c3 c8">. . .</td>
|
|
<td headers="r23 r24 c3 c9">. . .</td>
|
|
<td headers="r23 r24 c3 c10">. . .</td>
|
|
<td headers="r23 r24 c3 c11">. . .</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub0" id="r25" headers="r23 c1">Income source ($)</th>
|
|
<td colspan="8"></td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r26" headers="r23 r25 c1">Income from assets</th>
|
|
<td headers="r23 r25 r26 c2 c4">5.5</td>
|
|
<td headers="r23 r25 r26 c2 c5">6.7</td>
|
|
<td headers="r23 r25 r26 c2 c6">6.5</td>
|
|
<td headers="r23 r25 r26 c2 c7">6.5</td>
|
|
<td headers="r23 r25 r26 c3 c8">0.0</td>
|
|
<td headers="r23 r25 r26 c3 c9">-0.1</td>
|
|
<td headers="r23 r25 r26 c3 c10">-0.1</td>
|
|
<td headers="r23 r25 r26 c3 c11">-0.1</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r27" headers="r23 r25 c1">Earnings</th>
|
|
<td headers="r23 r25 r27 c2 c4">13.1</td>
|
|
<td headers="r23 r25 r27 c2 c5">8.9</td>
|
|
<td headers="r23 r25 r27 c2 c6">8.3</td>
|
|
<td headers="r23 r25 r27 c2 c7">6.8</td>
|
|
<td headers="r23 r25 r27 c3 c8">-0.1</td>
|
|
<td headers="r23 r25 r27 c3 c9">-0.1</td>
|
|
<td headers="r23 r25 r27 c3 c10">-0.1</td>
|
|
<td headers="r23 r25 r27 c3 c11">-0.2</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r28" headers="r23 r25 c1"><abbr class="spell">SSI</abbr> payments</th>
|
|
<td headers="r23 r25 r28 c2 c4">0.0</td>
|
|
<td headers="r23 r25 r28 c2 c5">0.0</td>
|
|
<td headers="r23 r25 r28 c2 c6">0.0</td>
|
|
<td headers="r23 r25 r28 c2 c7">0.0</td>
|
|
<td headers="r23 r25 r28 c3 c8">0.0</td>
|
|
<td headers="r23 r25 r28 c3 c9">0.0</td>
|
|
<td headers="r23 r25 r28 c3 c10">0.0</td>
|
|
<td headers="r23 r25 r28 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r29" headers="r23 r25 c1">Imputed rental income</th>
|
|
<td headers="r23 r25 r29 c2 c4">3.4</td>
|
|
<td headers="r23 r25 r29 c2 c5">3.5</td>
|
|
<td headers="r23 r25 r29 c2 c6">3.1</td>
|
|
<td headers="r23 r25 r29 c2 c7">3.3</td>
|
|
<td headers="r23 r25 r29 c3 c8">0.0</td>
|
|
<td headers="r23 r25 r29 c3 c9">0.0</td>
|
|
<td headers="r23 r25 r29 c3 c10">0.0</td>
|
|
<td headers="r23 r25 r29 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r30" headers="r23 r25 c1">Social Security benefits</th>
|
|
<td headers="r23 r25 r30 c2 c4">15.7</td>
|
|
<td headers="r23 r25 r30 c2 c5">16.3</td>
|
|
<td headers="r23 r25 r30 c2 c6">15.8</td>
|
|
<td headers="r23 r25 r30 c2 c7">15.5</td>
|
|
<td headers="r23 r25 r30 c3 c8">0.0</td>
|
|
<td headers="r23 r25 r30 c3 c9">0.0</td>
|
|
<td headers="r23 r25 r30 c3 c10">0.0</td>
|
|
<td headers="r23 r25 r30 c3 c11">0.0</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r31" headers="r23 r25 c1"><abbr class="spell">DB</abbr> pension benefits</th>
|
|
<td headers="r23 r25 r31 c2 c4">18.8</td>
|
|
<td headers="r23 r25 r31 c2 c5">15.6</td>
|
|
<td headers="r23 r25 r31 c2 c6">13.4</td>
|
|
<td headers="r23 r25 r31 c2 c7">11.9</td>
|
|
<td headers="r23 r25 r31 c3 c8">-6.4</td>
|
|
<td headers="r23 r25 r31 c3 c9">-7.6</td>
|
|
<td headers="r23 r25 r31 c3 c10">-8.1</td>
|
|
<td headers="r23 r25 r31 c3 c11">-8.5</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub1" id="r32" headers="r23 r25 c1">Retirement accounts</th>
|
|
<td headers="r23 r25 r32 c2 c4">8.4</td>
|
|
<td headers="r23 r25 r32 c2 c5">10.6</td>
|
|
<td headers="r23 r25 r32 c2 c6">11.9</td>
|
|
<td headers="r23 r25 r32 c2 c7">11.7</td>
|
|
<td headers="r23 r25 r32 c3 c8">0.3</td>
|
|
<td headers="r23 r25 r32 c3 c9">0.5</td>
|
|
<td headers="r23 r25 r32 c3 c10">0.4</td>
|
|
<td headers="r23 r25 r32 c3 c11">0.3</td>
|
|
</tr>
|
|
<tr>
|
|
<th class="stub2" id="r33" headers="r23 r25 r32 c1">Total income</th>
|
|
<td headers="r23 r25 r32 r33 c2 c4">64.9</td>
|
|
<td headers="r23 r25 r32 r33 c2 c5">61.6</td>
|
|
<td headers="r23 r25 r32 r33 c2 c6">58.9</td>
|
|
<td headers="r23 r25 r32 r33 c2 c7">55.8</td>
|
|
<td headers="r23 r25 r32 r33 c3 c8">-6.2</td>
|
|
<td headers="r23 r25 r32 r33 c3 c9">-7.2</td>
|
|
<td headers="r23 r25 r32 r33 c3 c10">-7.8</td>
|
|
<td headers="r23 r25 r32 r33 c3 c11">-8.6</td>
|
|
</tr>
|
|
</tbody>
|
|
<tfoot>
|
|
<tr>
|
|
<td class="firstNote" colspan="9">SOURCE: Authors' computations of <abbr>MINT</abbr>5 (see text for details).</td>
|
|
</tr>
|
|
<tr>
|
|
<td class="note" colspan="9">NOTES: Projections exclude individuals with family wealth in the top 5 percent of the distribution. Losers are defined as having at least a $10 decrease in income between the baseline and <abbr>U.K.</abbr> scenarios. </td>
|
|
</tr>
|
|
<tr>
|
|
<td class="lastNote" colspan="9">. . . = not applicable.</td>
|
|
</tr>
|
|
</tfoot>
|
|
</table>
|
|
</div>
|
|
<div id="notes">
|
|
<h2>Notes</h2>
|
|
<p> <a href="#mt1" id="mn1">1</a> The 2008 stock market crash will have little impact on the relative results in this study as most of the shift in <abbr class="spell">DB</abbr> pension accruals and new contributions to <abbr class="spell">DC</abbr> plans are projected to occur after the stock market crash. Siegel (2007), based on over 200 years of financial data, found that markets fluctuate around a mean trend. This "mean reversion" implies that one could reasonably expect the market to at least partially recover after the 2008 market crash. If the stock market does partially recover, Butrica, Smith, and Toder (2009) project that future retirees will lose very little retirement income and those that continue to invest in stocks after the crash can actually benefit from buying stocks on sale that subsequently grow at above average market returns.</p>
|
|
<p> <a href="#mt2" id="mn2">2</a> Before 1978, employees could make voluntary contributions to thrift saving plans established by employers; interest accruals within the plans were tax-free until withdrawal, but the contributions were not deductible. Contributions by employers to <abbr class="spell">DC</abbr> plans were tax-exempt, but employees did not have the option of making voluntary tax-deductible contributions.</p>
|
|
<p> <a href="#mt3" id="mn3">3</a> Imputed rental income is the return that homeowners receive from owning instead of renting, in the form of reduced rent, less costs of homeownership. It is estimated as a 3.0 percent real return on home equity (the difference between the house value and the remaining mortgage principal).</p>
|
|
<p> <a href="#mt4" id="mn4">4</a> <abbr>MINT</abbr>5 uses projections by <abbr class="spell">SSA</abbr>'s Office of the Chief Actuary of net immigration, disability prevalence through age 65, mortality rates, and the growth in average economy-wide wages and the consumer price index from the intermediate cost scenario in the 2008 <span class="nobr">Old-Age,</span> Survivors, and Disability Insurance Trustees Report (Board of Trustees 2008).</p>
|
|
<p> <a href="#mt5" id="mn5">5</a> Updated with Board of Trustees (2008) assumptions and technical corrections, November 2008 (<abbr>MINT</abbr>5exV5HIGH and <abbr>MINT</abbr>5exV5LOW).</p>
|
|
<p> <a href="#mt6" id="mn6">6</a> <abbr class="spell">CB</abbr> plans are a hybrid type of pension plan in which employers guarantee rates of return, as in a <abbr class="spell">DB</abbr> plan, but the employee receives a separate account that increases in value from both employer contributions and the plan rate of return, as in a <abbr class="spell">DC</abbr> account.</p>
|
|
<p> <a href="#mt7" id="mn7">7</a> <abbr class="spell">PENSIM</abbr> is a microsimulation model developed by Martin Holmer of the Policy Simulation Group. This model is used for the analysis of the retirement income implications of government policies affecting employer-sponsored pensions. The <abbr class="spell">PENSIM</abbr> projections of employee pension coverage are calibrated by worker age, broad industry group, union status, and firm size to the 2008 National Compensation Survey (<a href="https://www.bls.gov/ebs/">http://www.bls.gov/ncs/ebs/benefits/2008/benefits_retirement.htm</a>).</p>
|
|
<p> <a href="#mt8" id="mn8">8</a> <abbr>COLA</abbr>s are more prevalent in public-sector plans than in private-sector plans.</p>
|
|
<p> <a href="#mt9" id="mn9">9</a> The <abbr class="spell">DER</abbr> includes longitudinal values for taxable and deferred earnings based on <abbr class="spell">IRS</abbr> W-2 Forms from 1992 to 2004.</p>
|
|
<p><a href="#mt10" id="mn10">10</a> <abbr>PIMS</abbr> is a model developed by the <abbr class="spell">PBGC</abbr>. It contains data for a sample of over 600 <abbr class="spell">DB</abbr> plans. The model estimates future pension costs that must be borne by <abbr class="spell">PBGC</abbr> as a result of the bankruptcies of firms with <abbr class="spell">DB</abbr> plans.</p>
|
|
<p><a href="#mt11" id="mn11">11</a> The pension module assigns the actual <abbr class="spell">DC</abbr> provisions of the plan if they are known. Otherwise, <abbr class="spell">DC</abbr> plan parameters are imputed based on the distribution of known plans.</p>
|
|
<p><a href="#mt12" id="mn12">12</a> See Smith and others (2007, Table 8.9) for a list of the 25 baseline frozen pension plans and characteristics of the replacement <abbr class="spell">DC</abbr> plans.</p>
|
|
<p><a href="#mt13" id="mn13">13</a> Boomers are typically represented as those born from 1946 to 1964. For analytical purposes, however, we define the boomer cohort as those born from 1946 to 1965.</p>
|
|
<p><a href="#mt14" id="mn14">14</a> Income components may not sum to the total because of rounding.</p>
|
|
<p><a href="#mt15" id="mn15">15</a> Our earnings measure is "shared lifetime earnings"—the average of <span class="nobr">wage-indexed</span> shared earnings from ages 22 to 62, where shared earnings are computed by assigning each individual half the total earnings of the couple in the years when the individual is married and his or her own earnings in years when unmarried.</p>
|
|
<p><a href="#mt16" id="mn16">16</a> We define winners and losers as those with at least a $10 change in their per capita family income at age 67 between the baseline and <abbr>U.K.</abbr> scenarios.</p>
|
|
<p><a href="#mt17" id="mn17">17</a> <a href="#tableB1">Table B-1</a> shows the percent change in per capita income for winners and losers for the same subgroups as shown in <a href="#table9">Table 9</a>.</p>
|
|
<p><a href="#mt18" id="mn18">18</a> Some workers may also receive higher <abbr class="spell">DB</abbr> benefits after the freeze because of an increase in the earnings the plan replaces. This can happen if the pension replaces the average of the last 5 years of covered earnings and a higher-earning year before the freeze substitutes for a lower-earning year after the freeze.</p>
|
|
<p><a href="#mt19" id="mn19">19</a> <a href="#tableB2">Table B-2</a> shows mean family income at age 67, by income source for individuals that gain less than 2 percent, 2 percent to 5 percent, and 5 percent or more. <a href="#tableB3">Table B-3</a> shows the same information for losers.</p>
|
|
</div>
|
|
<div id="references">
|
|
<h2>References</h2>
|
|
<p>Aaronson, Stephanie, and Julia Coronado. 2005. Are firms or workers behind the shift away from <abbr class="spell">DB</abbr> pension plans? Federal Reserve Board Finance and Economics Discussion Series Working Paper <abbr title="Number">No.</abbr> 2005-17. Washington, <abbr class="spell">DC</abbr>: Federal Reserve Board of Governors.</p>
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|
<p><abbr class="spell">AARP</abbr>. 2007. <i>Enhancing <span class="nobr">401(k)</span> value and participation: Taking the automatic approach</i>. A report for <abbr class="spell">AARP</abbr> prepared by Towers Perrin. Washington, <abbr class="spell">DC</abbr>: American Association of Retired Persons (June).</p>
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|
<p>Aglira, Bob. 2006. To freeze or not to freeze: Observations on the <abbr>U.S.</abbr> pension landscape. <i>Global Retirement Perspective</i>. New York, <abbr title="New York">NY</abbr>: Mercer Human Resource Consulting.</p>
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|
<p>Anderson, Gary W., and Keith Brainard. 2004. Profitable prudence: The case for public employer defined benefit plans. Pension Research Council Working Paper <abbr title="Number">No.</abbr> 2004-6. Philadelphia, <abbr title="Pennsylvania">PA</abbr>: Wharton School of the University of Pennsylvania.</p>
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<p>[Board of Trustees] Board of Trustees of the Federal <span class="nobr">Old-Age</span> and Survivors Insurance and Disability Insurance Trust Funds. 2008. The 2008 annual report of the board of trustees of the federal <span class="nobr">Old-Age</span> and Survivors Insurance and federal Disability Insurance Trust Funds. Washington, <abbr class="spell">DC</abbr>: Government Printing Office.</p>
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<p>Broadbent, John, Michael Palumbo, and Elizabeth Woodman. 2006. The shift from defined benefit to defined contribution pension plans—Implications for asset allocation and risk management. Paper prepared for a working group on institutional investors, global savings, and asset allocation established by the Committee on the Global Financial System. Available at <a href="https://www.bis.org/publ/wgpapers/cgfs27broadbent3.pdf">http://www.bis.org/publ/wgpapers/cgfs27broadbent3.pdf</a>.</p>
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<p>Buessing, Marric, and Mauricio Soto. 2006. The state of private pensions: Current 5500 data. Issue in Brief <abbr title="Number">No.</abbr> 42. Chestnut Hill, <abbr title="Massachusetts">MA</abbr>: Center for Retirement Research at Boston College (February).</p>
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<p>Bureau of Labor Statistics. 2008. National compensation survey: Employee benefits in the United States, March 2008. Bulletin 2715. Washington, <abbr class="spell">DC</abbr>: Bureau of Labor Statistics. Available at <a href="https://www.bls.gov/ebs/publications/pdf/bulletin-2715-september-2008-employee-benefits-in-the-united-states-march-2008.pdf">http://www.bls.gov/ncs/ebs/benefits/2008/ownership/private/table02a.pdf</a>.</p>
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<p>Burtless, Gary. 2009. Financial market turbulence and Social Security reform. In <i>Pensions, Social Security and the privatization of risk</i>, Michell A. Orenstein, <abbr title="editor">ed.</abbr>, <span class="nobr">72–85.</span> New York, <abbr title="New York">NY</abbr>: Columbia University Press and Social Science Research Council.</p>
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<p>Butrica, Barbara A., Richard W. Johnson, Karen E. Smith, and Eugene Steuerle. 2006. The implicit tax on work at older ages. <i>National Tax Journal</i> <span class="nobr">59(2):</span> <span class="nobr">211–234.</span></p>
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<p>Butrica, Barbara, Karen E. Smith, and Eric Toder. 2009. What the 2008 stock market crash means for retirement security. Urban Institute Retirement Policy Discussion Paper, 9-03. Washington <abbr class="spell">DC</abbr>.</p>
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<p>Center on Federal Financial Institutions. 2006. <i>Pension reform: Summary of final 2006 bill</i>. Washington, <abbr class="spell">DC</abbr>: Center on Federal Financial Institutions.</p>
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<p>Clark, Robert L., Ann A. McDermed, and Michelle White Trawick. 1993. Firm choice of type of pension plan: Trends and determinants. In <i>The future of pensions in the United States,</i> Ray Schmitt, <abbr title="editor">ed.</abbr>, <span class="nobr">114–125.</span> Pension Research Council. Philadelphia, <abbr title="Pennsylvania">PA</abbr>: University of Pennsylvania Press.</p>
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<p>Copeland, Craig. 2006. Retirement plan participation and retirees' perception of their standard of living. <i><abbr>EBRI</abbr> Issue Brief</i> <abbr title="Number">No.</abbr> 289. Washington, <abbr class="spell">DC</abbr>: Employee Benefit Research Institute.</p>
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<p>Department of Labor. 2002. Private pension plan bulletin: Abstract of 1998 form 5500 annual reports, Number 11, Winter <span class="nobr">2001–2002.</span> Washington, <abbr class="spell">DC</abbr>: Department of Labor. Available at http://www.dol.gov/ebsa/PDF/1998pensionplanbulletin.PDF.</p>
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<p>Gebhardtsbauer, Ron. 2004. What are the trade-offs? Defined benefit vs. defined contribution systems. Paper presented at the <abbr class="spell">AARP</abbr>/<abbr>CEPS</abbr> Forum—A Balancing Act: Achieving Adequacy and Sustainability in Retirement Income Reform, Brussels, Belgium (March 4).</p>
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<p>———. 2006. The future of defined benefit (<abbr class="spell">DB</abbr>) plans. Keynote speech at the National Plan Sponsor Conference—The Future of <abbr class="spell">DB</abbr> Plans, Washington, <abbr class="spell">DC</abbr> (December 6). Available at <a href="https://www.actuary.org/sites/default/files/pdf/pension/db_rondec06.pdf">http://www.actuary.org/pdf/pension/db_rondec06.pdf</a>.</p>
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<p>Ghilarducci, Teresa. 2006. <i>Future retirement income security needs defined benefit pensions</i>. Washington, <abbr class="spell">DC</abbr>: Center for American Progress (March).</p>
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<p>[<abbr class="spell">GAO</abbr>] Government Accountability Office. 2008. <i>Defined benefit pensions: Plan freezes affect millions of participants and may pose retirement income challenges</i>. <abbr class="spell">GAO</abbr>-08-817. Washington, <abbr class="spell">DC</abbr>: Government Accountability Office.</p>
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<p>Groom Law Group. 2008. Key Provisions of the Worker, Retiree, and Employer Recovery Act of 2008—A Bit More than <abbr class="spell">PPA</abbr> Technical Corrections. Memorandum to clients, December 19. Washington, <abbr class="spell">DC</abbr>: Groom Law Group, Chartered.</p>
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<p>Gustman, Alan L., and Thomas L. Steinmeier. 1992. The stampede toward <abbr class="spell">DC</abbr> pension plans: Fact or fiction. <i>Industrial Relations</i> <span class="nobr">31(2):</span> <span class="nobr">361–369.</span></p>
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<p>Hustead, Edwin C. 1998. Trends in retirement income plan administrative expenses. In <i>Living with defined contribution pensions,</i> Olivia Mitchell, <abbr title="editor">ed.</abbr>, <span class="nobr">166–177.</span> Philadelphia, <abbr title="Pennsylvania">PA</abbr>: University of Pennsylvania Press.</p>
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<p>Johnson, Richard W., Leonard E. Burman, and Deborah I. Kobes. 2004. <i>Annuitized wealth at older ages: Evidence from the Health and Retirement Study</i>. Final Report to the Employee Benefits Security Administration, Department of Labor. Washington, <abbr class="spell">DC</abbr>: Urban Institute.</p>
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<p>Klose, Charles, and David Tooley. 2009. Summary of key provisions of the Worker, Retiree, and Employer Recovery Act of 2008. <i>Regulatory Brief</i> <abbr title="Number">No.</abbr> 2009-01. Valley Forge, <abbr title="Pennsylvania">PA</abbr>: Vanguard Group. Available at https://institutional.vanguard.com/iam/pdf/RBA_012009_01.pdf.</p>
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<p>McKinsey & Company. 2007. <i>The coming shakeout in the defined benefit market</i>. New York, <abbr title="New York">NY</abbr>: McKinsey & Company. Available at http://www.mckinsey.com/clientservice/bankingsecurities/pdf/coming_shakeout_in_defined_benefit_market.pdf.</p>
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<p>Munnell, Alicia H., Jean-Pierre Aubry, and Dan Muldoon. 2008a. The financial crisis and private sector defined benefit plans. Issue in Brief <abbr title="Number">No.</abbr> 8-18. Chestnut Hill, <abbr title="Massachusetts">MA</abbr>: Center for Retirement Research at Boston College (November).</p>
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|
<p>———. 2008b The financial crisis and state/local defined benefit plans. Issue in Brief <abbr title="Number">No.</abbr> 8-19. Chestnut Hill, <abbr title="Massachusetts">MA</abbr>: Center for Retirement Research at Boston College (November).</p>
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