Portfolio Allocation in the Face of a Means-Tested Public Pension
39 Pages Posted: 20 Oct 2009
Abstract
Is there evidence that households adjust their asset portfolios just prior to retirement in response to a means-tested public pension? We address this question by estimating a system of asset equations constrained to add up to net worth. We find little evidence that in 2006 healthy households or couples responded to the incentives embedded in the means test determining pension eligibility by reallocating their assets. While there are some significant differences in asset portfolios associated with being near the income threshold, being of pensionable age, and being in poor health these differences are often only marginally significant, are not robust across time, and are not clearly consistent with the incentives inherent in the pension eligibility rules. In 2006, any behavioral response to the means test seems to occur among single pensioners in poor health. Comparison with 2002 results suggests the incentives to reallocate assets may have weakened over time.
Keywords: asset portfolios, means testing, public pension, household wealth
JEL Classification: H30, H31, D31
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
The Role of Permanent Income and Demographics in Black/White Differences in Wealth
-
Does Cultural Origin Affect Saving Behavior? Evidence from Immigrants
By Christopher D. Carroll, Byung-kun Rhee, ...
-
The Role of Permanent Income and Demographics in Black/White Differences in Wealth
-
The Wealth and Asset Holdings of U.S.-Born and Foreign-Born Households: Evidence from Sipp Data
-
The Savings Behavior of Temporary and Permanent Migrants in Germany
By Thomas K. Bauer and Mathias Sinning
-
The Savings Behavior of Temporary and Permanent Migrants in Germany
By Thomas K. Bauer and Mathias Sinning
-
A Comparative Analysis of the Nativity Wealth Gap
By Thomas K. Bauer, Deborah A. Cobb-clark, ...
-
A Comparative Analysis of the Nativity Wealth Gap
By Thomas K. Bauer, Deborah A. Cobb-clark, ...