Despite the recent downturn in the stock market, the 1990s boom and the shift to defined contribution plans mean that more individuals will have significant wealth upon retirement. How they use that wealth will determine not only their own well-being, but also the living standards of their children, the resources available to philanthropies, and the level of investment capital in the economy. This volume explores the reasons why people save, how they decide to allocate their wealth once they retire, and how givers select their beneficiaries. It also assesses the extent to which the estate tax and annuitization of retirement wealth affects the amount and nature of wealth transfers. Finally, it looks at the impact of wealth transfers––first on the amount of aggregate saving and capital accumulation, and then on the distribution of wealth among households. Several conclusions emerge. First, gifts and bequests are important; they may account for about half of total wealth in America. Second, rich people make most of the wealth transfers. They are thoughtful about how much they pay in taxes and how they dispose of their wealth. They care about philanthropic causes and view their charitable contributions as more than a way to avoid paying estate taxes. Third, most nonrich people probably have some lexicographic preferences about the disposition of their wealth; they want to ensure they have adequate resources to take care of their own needs, and if money is left over, they would like it to go to their children. Fourth, little support has emerged for the pure altruistic model of bequests. Fifth, institutions matter. In the case of the rich, the estate tax probably reduces saving and increases bequests to charity. In the case of the nonrich, the shift to defined contribution plans will at a minimum mean that they have more wealth in their hands when they die, and therefore they will leave larger accidental bequests. It might also increase their interest in leaving an estate for their heirs. Saving and bequest behavior remains a fertile ground for future research. Major differences of opinion remain on such important issues as the effect of bequests on the distribution of wealth. The contributors to this volume provide a summary of existing knowledge, push the debate forward, and link topics in a unique and comprehensive way. At the same time, they make clear that many questions remain unresolved about the motives for and effects of wealth transfers.

The United States is in the midst of a major demographic shift. In the coming decades, people aged 65 and over will make up an increasingly large percentage of the population: The ratio of people aged 65+ to people aged 20-64 will rise by 80%. This shift is happening for two reasons: people are living longer, and many couples are choosing to have fewer children and to have those children somewhat later in life. The resulting demographic shift will present the nation with economic challenges, both to absorb the costs and to leverage the benefits of an aging population. Aging and the Macroeconomy: Long-Term Implications of an Older Population presents the fundamental factors driving the aging of the U.S. population, as well as its societal implications and likely long-term macroeconomic effects in a global context. The report finds that, while population aging does not pose an insurmountable challenge to the nation, it is imperative that sensible policies are implemented soon to allow companies and households to respond. It offers four practical approaches for preparing resources to support the future consumption of households and for adapting to the new economic landscape.

In this book, two experts on retirement policy analyze 401(k) plans, the fastest-growing type of employer-sponsored pensions and a vital source of retirement income for the American middle class.

Employees are being given more and more decisions to make with regards to their pension and healthcare plans. Yet increasing research in the social sciences shows that the decisions 'real' people make are not those of the thoughtful and well-informed economic agent often portrayed in economic research, but are often based on flawed information and made without a full understanding of their financial implications. The contributors to Pension Design and Structure explore theassumptions behind commonly-held theories of retirement decision-making, and the consequences of the growing volume of research in behavioural finance and economics for the field of pension research. Contributors are drawn from a variety of disciplines, and include leading pensions experts.