Saving Regret and Procrastination.

In countries, where a substantial proportion of retirement income rests on savings, there is much concern that a sizeable fraction of the population reaches retirement with insufficient financial resources. We define saving regret as the wish in hindsight to have saved more earlier in life. We measured saving regret and possible determinants in a survey of U.S. households in which respondents were aged 60-79. We find high levels of saving regret, affirmed by some 58%. Saving regret exhibits significant and plausible correlations with personal characteristics and wealth: Married, older, healthier and wealthier respondents are less likely to report saving regret, suggesting the measure's validity. We find only weak evidence for correlations between saving regret and measures of procrastination: persons with traits associated with procrastination express saving regret about as often as those without those traits.

Trends in inequalities in the prevalence of dementia in the United States.

This paper presents estimates of the prevalence of dementia in the United States from 2000 to 2016 by age, sex, race and ethnicity, education, and a measure of lifetime earnings, using data on 21,442 individuals aged 65 y and older and 97,629 person-year observations from a nationally representative survey, the Health and Retirement Study (HRS). The survey includes a range of cognitive tests, and a subsample underwent clinical assessment for dementia. We developed a longitudinal, latent-variable model of cognitive status, which we estimated using the Markov Chain Monte Carlo method. This model provides more accurate estimates of dementia prevalence in population subgroups than do previously used methods on the HRS. The age-adjusted prevalence of dementia decreased from 12.2% in 2000 (95% CI, 11.7 to 12.7%) to 8.5% in 2016 (7.9 to 9.1%) in the 65+ population, a statistically significant decline of 3.7 percentage points or 30.1%. Females are more likely to live with dementia, but the sex difference has narrowed. In the male subsample, we found a reduction in inequalities across education, earnings, and racial and ethnic groups; among females, those inequalities also declined, but less strongly. We observed a substantial increase in the level of education between 2000 and 2016 in the sample. This compositional change can explain, in a statistical sense, about 40% of the reduction in dementia prevalence among men and 20% among women, whereas compositional changes in the older population by age, race and ethnicity, and cardiovascular risk factors mattered less.

Trends in Health in Midlife and Late Life.

Gains in life expectancy have recently slowed and mortality inequalities have increased. This paper examines whether trends in health observed at ages 55 to 89 mirror those trends in mortality, which may serve as an early indicator for the future evolution of mortality. We found that many health outcomes have worsened from 1992 to 2016, especially at ages below 70, and that differentials in health between low and high education groups have increased among the more recent cohorts. Overall the findings cast a pessimistic light on the future evolution of mortality rates and mortality inequalities.

Forecasting mortality inequalities in the U.S. based on trends in midlife health.

Recent literature has documented a widening gap in mortality between older individuals of high versus low socioeconomic status (SES) in the U.S. This paper investigates whether this trend will continue. We analyze the health status of successive cohorts of 54-60-year-old U.S. individuals born between 1934 and 1959 and use a rich set of health indicators to forecast life expectancies. The detailed health measures come from the longitudinal Health and Retirement Study. We find that many health indicators have worsened recently. For example, rates of obesity, diabetes, and self-reported levels of pain sharply increased between 1992 and 2016. Directly relevant for mortality, recent cohorts report lower subjective survival probabilities. Using Social Security wealth as an SES indicator, we find strong evidence for increasing health inequalities. We predict overall life expectancy to increase further; but the increase will be concentrated among higher SES individuals and mortality inequality will continue to increase.

The Age Profile of Life Satisfaction After Age 65 in the U.S.

Although income and wealth are frequently used as indicators of well-being, they are increasingly augmented with subjective measures such as life satisfaction to capture broader dimensions of the well-being of individuals. Based on large surveys of individuals, life satisfaction in cross-section often is found to increase with age beyond retirement into advanced old age. It may seem puzzling that average life satisfaction does not decline at older ages because older individuals are more likely to experience chronic or acute health conditions, or the loss of a spouse. Accordingly, this empirical pattern has been called the "paradox of well-being." We examine the age profile of life satisfaction of the U.S. population age 65 or older in the Health and Retirement Study (HRS), and find that in cross-section it increases between age 65 and 71 and is flat thereafter; but based on the longitudinal dimension of the HRS, life satisfaction significantly declines with age and the rate of decline accelerates with age. We reconcile the cross-section and longitudinal measurements by showing that both differential mortality and differential non-response bias the cross-sectional age profile upward: individuals with higher life satisfaction and in better health tend to live longer, and, among survivors, individuals with higher life satisfaction are more likely to remain in the survey, masking the decline in life satisfaction experienced by individuals as they age. We conclude that the optimistic view about increasing life satisfaction at older ages based on cross-sectional data is not warranted.

The Relationship Between Lifetime Out-of-pocket Medical Expenditures, Dementia, and Socioeconomic Status in the U.S.

Dementia is one of the most expensive medical conditions. The costs are borne by families, by private insurance and by society via public programs such as Medicaid in the U.S.. There is extensive research on the relationship between dementia and annual medical spending. This paper, instead, estimates cumulative lifetime medical expenditures that can be attributed to the onset of dementia using a nationally representative longitudinal survey from the U.S., the Health and Retirement Study. The lifetime expenditures are estimated by summing any out-of-pocket medical spending reported in the panel from age 65 to death. Censored cases are imputed using a non-parametric matching algorithm called splicing. For example, survivors to the most recent wave are matched to similar individuals from older cohorts who are observed at the relevant ages all the way through death. We find that those who live with dementia for at least half a year pay, on average, $38,540 more out of pocket from age 65 to death when controlling for length of life, demographics, lifetime earnings and comorbidities. The costs of dementia are almost exclusively due to spending on nursing homes. Spending on drugs, doctor visits or hospitals, is not significantly related to dementia. The lifetime costs of dementia are significantly larger for white and rich individuals, perhaps because they use higher quality nursing homes and because they have more financial resources to spend down before becoming eligible for Medicaid support.

Reducing cross-wave variability in survey measures of household wealth.

Survey measures of household wealth often incorporate measurement error. The resulting excess variability in the first difference in wealth makes meaningful statistical inference difficult on changes in household-level wealth. We study the effects of two methods intended to reduce this problem: Asset verification confronts respondents with large discrepancies between wealth reports from the current wave and from the previous wave. Cross-wave imputation uses adjacent wave information in the imputation procedures for missing data. In the U.S. Health and Retirement Study, the corrections from asset verification substantially reduced wave-to-wave changes in wealth. The cross-wave imputations also reduced variation, but to a lesser extent.

Dementia Prevalence in the United States in 2000 and 2012: Estimates Based on a Nationally Representative Study.

Objectives: Age- and sex-specific rates of dementia are estimated in the U.S. population aged 65 or older in 2000 and 2012 using a large nationally representative dataset, the Health and Retirement Study (HRS), and accounting for mortality selection and specificities of the interview protocol. Method: A latent cognitive ability model is estimated by maximum simulated likelihood. Prevalence of dementia is identified using HRS cognition measures and the Aging, Demographics and Memory Study (ADAMS), a subset of the HRS (n = 856) with clinical assessment for dementia. Different cognitive measures are collected in self and proxy interviews. From 2006 onward, the HRS collected fewer interviews by proxy. Selection into proxy interviews is modeled as well as survival into the ADAMS sample from the previous HRS interview. Results: The prevalence of dementia decreased from 12.0% (SE = 0.48%) in 2000 to 10.5% (SE = 0.49%) in 2012 in the 65+ population, a statistically significant decline of 12.6% (p < .01). The percentage change in prevalence was larger among males (16.6% vs 9.5%), and younger individuals. Discussion: The prevalence of dementia among those 65 or older decreased between 2000 and 2012, although less rapidly than reported in other studies. The difference is primarily due to our modeling selection into proxy interviews.

Personality and Employment Transitions at Older Ages: Direct and Indirect Effects through Non-Monetary Job Characteristics.

We study whether individuals with different personality traits systematically exhibit different retirement trajectories. We find weak direct associations between personality and employment transitions. On the other hand, personality does contribute indirectly to these transitions by moderating the effects of non-monetary job characteristics. Specifically, workers with different traits are observed to follow different retirement paths when faced with similar physical demands, computer skills requirements, job flexibility and age discrimination in the workplace. Contrary to other economic domains, conscientiousness does not have the strongest association with retirement; the other components of the Big Five personality traits show more salient patterns.

Distribution of lifetime nursing home use and of out-of-pocket spending.

Reliable estimates of the lifetime risk of using a nursing home and the associated out-of-pocket costs are important for the saving decisions by individuals and families, and for the purchase of long-term care insurance. We used data on up to 18 y of nursing home use and out-of-pocket costs drawn from the Health and Retirement Study, a longitudinal household survey representative of the older US population. We accumulated the use and spending by individuals over many years, and we developed and used an individual-level matching method to account for use before and after the observation period. In addition, for forecasting, we estimated a dynamic parametric model of nursing home use and spending. We found that 56% of persons aged 57-61 will stay at least one night in a nursing home during their lifetimes, but only 32% of the cohort will pay anything out of pocket. Averaged over all persons, total out-of-pocket expenditures looking forward from age 57 were approximately $7,300, discounted at 3% per year. However, the 95th percentile of spending was almost $47,000. We conclude that the percentage of people ever staying in nursing homes is substantially higher than previous estimates, at least partly due to an increase in nursing home episodes of short duration. Average lifetime out-of-pocket costs may be affordable, but some people will incur much higher costs.

Individual survival curves comparing subjective and observed mortality risks.

We compare individual survival curves constructed from objective (actual mortality) and elicited subjective information (probability of survival to a given target age). We develop a methodology to estimate jointly subjective and objective individual survival curves accounting for rounding on subjective reports of perceived survival. We make use of the long follow-up period in the Health and Retirement Study and the high quality of mortality data to estimate individual survival curves that feature both observed and unobserved heterogeneity. This allows us to compare objective and subjective estimates of remaining life expectancy for various groups and compare welfare effects of objective and subjective mortality risk using the life cycle model of consumption. We find that subjective and objective hazards are not the same. The median welfare loss from misperceptions of mortality risk when annuities are not available is 7% of current wealth at age 65 whereas more than 25% of respondents have losses larger than 60% of wealth. When annuities are available and exogenously given, the welfare loss is substantially lower.

Future Monetary Costs of Dementia in the United States under Alternative Dementia Prevalence Scenarios.

Population aging will likely lead to increases is health care spending and the ability of governments to support entitlement programs such as Medicare and Medicaid. Dementia is a chronic condition that is especially pertinent because of its strong association with old age and because care for dementia is labor intensive and expensive. Indeed, prior research has found that if current dementia prevalence rates persist population aging will generate very large increases in health care spending for dementia. In this study we considered two alternative assumptions or scenarios about future prevalence. The first adjusts the prevalence projections using recent research that suggests dementia prevalence may be declining. The second uses growth hypertension, obesity and diabetes, and the relationship between dementia and these conditions to adjust future prevalence rates. We find under the first scenario that if the rates of decline in age-specific dementia rates persist, future costs will be much less than previous estimates, about 40% lower. Under the second scenario, the growth in those conditions makes only small differences in costs.

How Do Management Fees Affect Retirement Wealth under Mexico's Personal Retirement Accounts System?

In 1997, Mexico transformed its pay-as-you-go social security system to a fully funded system with personal retirement accounts, including management fees. This article examines changes in retirement wealth resulting from this new system. It shows that management fees have drained a significant proportion of individuals' retirement wealth and have increased the number of persons claiming a government-subsidized minimum pension, particularly from the time the system was introduced in 1997 until adjustment to management fees in 2008. Since 2008, retirement wealth accumulation has been similar to that of the previous system. En 1997, México transformó su sistema de pensiones basado en cotizaciones individuales a uno de ahorro para el retiro que incluyen cuotas por la administración de las cuentas. El presente estudio examina los cambios en el monto de las pensiones como resultado de la introducción del nuevo sistema. Los resultados muestran que las cuotas de administración han drenado una proporción significativa del ahorro para el retiro de los individuos por lo que ha aumentado el número de personas que solicita la pensión mínima garantizada subsidiada por el gobierno desde que se introdujo el sistema en 1997 hasta que se hicieron ajustes en las cuotas de administración de los fondos de pensiones en 2008. A partir de 2008, la acumulación del ahorro para el retiro ha sido similar que la del sistema anterior.

Monetary costs of dementia in the United States.

BACKGROUND: Dementia affects a large and growing number of older adults in the United States. The monetary costs attributable to dementia are likely to be similarly large and to continue to increase. METHODS: In a subsample (856 persons) of the population in the Health and Retirement Study (HRS), a nationally representative longitudinal study of older adults, the diagnosis of dementia was determined with the use of a detailed in-home cognitive assessment that was 3 to 4 hours in duration and a review by an expert panel. We then imputed cognitive status to the full HRS sample (10,903 persons, 31,936 person-years) on the basis of measures of cognitive and functional status available for all HRS respondents, thereby identifying persons in the larger sample with a high probability of dementia. The market costs associated with care for persons with dementia were determined on the basis of self-reported out-of-pocket spending and the utilization of nursing home care; Medicare claims data were used to identify costs paid by Medicare. Hours of informal (unpaid) care were valued either as the cost of equivalent formal (paid) care or as the estimated wages forgone by informal caregivers. RESULTS: The estimated prevalence of dementia among persons older than 70 years of age in the United States in 2010 was 14.7%. The yearly monetary cost per person that was attributable to dementia was either $56,290 (95% confidence interval [CI], $42,746 to $69,834) or $41,689 (95% CI, $31,017 to $52,362), depending on the method used to value informal care. These individual costs suggest that the total monetary cost of dementia in 2010 was between $157 billion and $215 billion. Medicare paid approximately $11 billion of this cost. CONCLUSIONS: Dementia represents a substantial financial burden on society, one that is similar to the financial burden of heart disease and cancer. (Funded by the National Institute on Aging.).

Dementia and out-of-pocket spending on health care services.

BACKGROUND: High levels of out-of-pocket (OOP) spending for health care may lead patients to forego needed services and medications as well as hamper their ability to pay for other essential goods. Because it leads to disability and the loss of independence, dementia may put patients and their families at risk for high OOP spending, especially for long-term care services. METHODS: We used data from the Aging, Demographics, and Memory Study, a nationally representative subsample (n = 743) of the Health and Retirement Study, to determine whether individuals with dementia had higher self-reported OOP spending compared with those with cognitive impairment without dementia and those with normal cognitive function. We also examined the relationship between dementia and utilization of dental care and prescription medications-two types of health care that are frequently paid for OOP. Multivariate and logistic regression models were used to adjust for the influence of potential confounders. RESULTS: After controlling for demographics and comorbidities, those with dementia had more than three times the yearly OOP spending compared with those with normal cognition ($8216 for those with dementia vs. $2570 for those with normal cognition, P < .01). Higher OOP spending for those with dementia was mainly driven by greater expenditures on nursing home care (P < .01). Dementia was not associated with the likelihood of visiting the dentist (P = .76) or foregoing prescription medications owing to cost (P = .34). CONCLUSIONS: Dementia is associated with high levels of OOP spending but not with the use of dental care or foregoing prescription medications, suggesting that excess OOP spending among those with dementia does not "crowd out" spending on these other health care services.

Heterogeneity in spending change at retirement.

The simple one-good model of life-cycle consumption requires that consumption be continuous over retirement; yet prior research based on partial measures of consumption or on synthetic panels indicates that spending drops at retirement, a result that has been called the retirement-consumption puzzle. Using panel data on total spending, nondurable spending and food spending, we find that spending declines at small rates at retirement, rates that could be explained by mechanisms such as the cessation of work-related expenses, unexpected retirement due to a health shock or by the substitution of time for spending. We find substantial heterogeneity in spending change at retirement: in the upper half of the wealth distribution spending increased. In the low-wealth population where spending did decline at higher rates, the main explanation for the decline appears to be early retirement due to poor health, possibly augmented by a short planning horizon by a minority of the population.

Conscientiousness and longevity: an examination of possible mediators.

OBJECTIVE: Conscientious individuals tend to experience a number of health benefits, not the least of which being greater longevity. However, it remains an open question as to why this link with longevity occurs. The current study tested two possible mediators (physical health and cognitive functioning) of the link between conscientiousness and longevity. METHOD: We tested these mediators using a 10-year longitudinal sample (N = 512), a subset of the long-running Health and Retirement Study of aging adults. Measures included an adjective-rating measure of conscientiousness, self-reported health conditions, and three measures of cognitive functioning (word recall, delayed recall, and vocabulary) included in the 1996 wave of the HRS study. RESULTS: Our results found that conscientiousness significantly predicted greater longevity, even in a model including the two proposed mediator variables, gender, age, and years of education. Moreover, cognitive functioning appears to partially mediate this relationship. CONCLUSIONS: This study replicates previous research showing that conscientious individuals tend to lead longer lives, and provides further insight into why this effect occurs. In addition, it underscores the importance of measurement considerations.

Subjective Probabilities in Household Surveys.

Subjective probabilities are now collected on a number of large household surveys with the objective of providing data to better understand inter-temporal decision making. Comparison of subjective probabilities with actual outcomes shows that the probabilities have considerable predictive power in situations where individuals have considerable private information such as survival and retirement. In contrast the subjective probability of a stock market gain varies greatly across individuals even though no one has private information and the outcome is the same for everyone. An explanation is that there is considerable variation in accessing and processing information. Further, the subjective probability of a stock market gain is considerably lower than historical averages, providing an explanation for the relatively low frequency of stock holding. An important research objective will be to understand how individuals form their subjective probabilities.