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Older public sector workers’ retirement planning, participation, and preparedness

Nov 2014
Working Paper
By  Robert Clark, Robert Hammond, Emma Hanson, Melinda Morrill
Once retired from a career job, individuals must live off savings, Social Security, and pensions or earnings from post-retirement work. Those who have made adequate plans for retirement are more likely to be able to meet their desired levels of consumption once retired and are less likely to end up relying on public assistance or having to reenter the labor market. While much attention has been paid to participation in voluntary retirement saving plans, less is known about workers’ planning for retirement. Using administrative records linked to a large-scale survey, we explore what factors are associated with both objective and subjective measures of planning for retirement among public sector workers in North Carolina. We find that only about half our sample of workers ages 50-69 have made a retirement plan. We show that individuals who exhibit higher levels of time discounting, or impatience, are also less likely to plan for retirement and that financial literacy is associated with higher rates of planning. We also show that planning is related to wealth accumulation and retirement preparedness.