The Role of Government in Life-Cycle Saving and Investing

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Research Foundation Publications
February 2008 | Vol. 2008 | No. 1 | 34 pages
Source: CFA Institute
Alicia H. Munnell

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Abstract

As employers are withdrawing from providing both defined-benefit retirement plans and postretirement health care benefits, benefits from Social Security are declining relative to retirees’ previous earnings. Such changes are not counterbalanced by individuals’ relatively modest accumulation of retirement savings. Therefore, government must assume new roles, such as improving the market for annuities and reverse mortgages. Regarding Social Security itself, which is the principal source of support for many retirees, its financing problems should be framed not in terms of budgetary needs but in terms of life-cycle savings needs.

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Behavioral Finance
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Risk Management
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